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>>> Iridium connects with Qualcomm <<<
>>> 2 Unlikely Stocks Sent Markets Soaring Friday
By Dan Caplinger
Motley Fool
Jan 6, 2023
https://www.fool.com/investing/2023/01/06/2-unlikely-stocks-sent-markets-soaring-friday/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Iridium connects with Qualcomm
Meanwhile, shares of Iridium Communications picked up 13% on Friday. The satellite network specialist announced a major partnership with Qualcomm (QCOM -0.61%) that could dramatically boost Iridium's business and the space stock's price.
Under the terms of the agreement, Iridium's fully operational satellite constellation will support Qualcomm's new Snapdragon Satellite mobile solution, which is expected to make its debut in the second half of this year. Select premium smartphone models running the Android operating system will start offering emergency messaging over the satellite network in select regions, with plans to roll out service more broadly in the future.
In the long run, Iridium has even more ambitious plans for its satellite network. In addition to voice and data communications via mobile phone, Iridium also notes that its satellite connectivity can have equally useful applications for vehicles as well as in business assets connected through the Internet of Things. By making a partnership with Qualcomm rather than simply making technology available in a single cellphone model, Iridium ensures maximum penetration of its service and opens the door to wider adoption as users get familiar with the technology.
After more than a decade of holding still, Iridium stock has soared fivefold since 2018. Investors are more excited than ever that the long-term vision of the satellite network operator is finally becoming reality.
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>>> 3 Investing Megatrends You Can't Afford to Miss
Motley Fool
By Matthew DiLallo
Nov 12, 2022
https://www.fool.com/investing/2022/11/12/3-investing-megatrends-you-cant-afford-to-miss/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
Digitalization will require a massive infrastructure investment over the next five years.
Decarbonization is a multi-decade, multi-trillion-dollar investment opportunity.
Deglobalization will see governments spend billions to increase their resource and supply security.
Trillions of dollars will pour into these themes over the coming years.
There's a lot of near-term uncertainty facing the global economy. Surging inflation and rising interest rates are driving growing concerns we could be heading toward a recession. That could impact cyclical companies that rely on an expanding economy to drive growth.
However, amid the uncertainty, three prominent macroeconomic themes have emerged in recent years and will continue to drive growth in certain sectors: digitalization, decarbonization, and deglobalization. Here's why investors won't want to miss these megatrends.
Data-driven growth
Companies worldwide will invest an estimated $1 trillion in capital over the next five years to upgrade global data infrastructure. Those investments include upgrading copper wire networks to fiber optic cables, expanding global data center capacity, and building additional cell towers to support 5G networks, the Internet of Things, and artificial intelligence (AI).
Many companies focus on building the infrastructure needed to support the digitalization trend. For example, Brookfield Infrastructure (BIPC 0.18%) (BIP 0.16%) is investing in fiber networks, wireless infrastructure, and data centers.
Brookfield also recently agreed to acquire a European telecom tower company. It has 36,000 towers and a pipeline of 5,200 more that it expects to build for its primary tenant over the next five years to support its growth. That's one of several data infrastructure investments Brookfield has secured that will help power its growth in the coming years.
Meanwhile, real estate investment trusts (REITs) American Tower (AMT 0.97%), Crown Castle (CCI 0.83%), Equinix (EQIX 2.50%), and Digital Realty (DLR 3.33%) are focusing on various aspects of the digitalization megatrend to drive growth. American Tower recently expanded its global tower business to include data centers, putting it in an even better position to capitalize on the digitalization megatrend.
Crown Castle sees a decade-long investment cycle in 5G to build more towers, small cell nodes, and fiber optic networks. Data center REITs Equinix and Digital Realty have several expansion projects underway worldwide to help meet growing data center demand. Those investments position these REITs to continue growing their cash flow and dividends at healthy rates.
A powerful growth opportunity
Decarbonization is a multi-trillion-dollar trend that will last several decades. Energy companies must invest trillions of dollars in building renewable-energy-generating capacity to replace fossil fuels.
For example, leading utility NextEra Energy (NEE 1.54%) expects to deploy from $85 billion to $95 billion on new investments through 2025, primarily geared toward decarbonization. Those investments could give NextEra Energy the power to grow earnings and dividends at double-digit annual rates for the next several years.
Brookfield Renewable (BEPC 1.96%) (BEP 1.61%) is also investing heavily to capitalize on the decarbonization megatrend. The company has over 100 gigawatts of renewable power projects in its pipeline, more than four times its current operating capacity. It also has carbon capture and storage investments to help decarbonize other sectors of the economy. These investments could power upwards of 20% annual earnings-per-share growth for the company over the next several years.
Security is driving new investments
The pandemic exposed weaknesses in the global supply chain. That's leading governments to shift their focus to securing supplies of energy and other materials crucial to their economies.
The drive toward energy independence is fueling a boom in liquefied natural gas (LNG). European countries are locking up LNG supplies to reduce their dependence on Russian gas. That's enabled several LNG developers to move forward with new liquefaction and export facilities this year, including Cheniere Energy (LNG -0.12%). It started building its Corpus Christi Stage 3 project consisting of seven LNG liquefaction trains. The company is also evaluating an additional expansion to build two more trains at that facility.
Meanwhile, several companies are building new manufacturing facilities in the U.S. as the country restores supply. For example, semiconductor giant Intel (INTC 1.76%) is investing billions of dollars into building several new chip manufacturing facilities in Arizona and Ohio.
One catalyst driving Intel's investments is the CHIPS Act, which provides incentives to help boost domestic chip manufacturing capacity and reduce the country's reliance on overseas markets. Intel will be a major beneficiary of this recently passed legislation as it should help finance its manufacturing build-out in the country. That will better position it to capitalize on the rapidly growing semiconductor market that could double by the end of the decade, reaching $1 trillion in global sales.
Focus on the long-term picture
There's a lot of uncertainty in the global economy these days. However, it's clear that governments and companies will pour trillions of dollars into digitalization, decarbonization, and deglobalization in the coming years. Because of that, companies focused on those megatrends should thrive. That makes them potentially lucrative opportunities that investors won't want to miss.
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American Tower - >>> 3 REITs to Buy During a Tech Sell-Off
Motley Fool
By Mike Price
May 25, 2022
https://www.fool.com/investing/2022/05/25/3-reits-to-buy-during-a-tech-sell-off/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
KEY POINTS
American Tower leases 5G towers and is expanding into data centers.
Digital Realty is the 800-pound gorilla in data centers.
Americold leads the temperature-controlled warehouse industry.
These REITs will soar when tech recovers and are safe until then.
It hasn't been a great year for tech investors. The Nasdaq is down 27%. Several big-name tech stocks are down even more, with a few down as much as 80%.
That said, drawdowns like this are relatively normal for the stock market. The Nasdaq has dropped at least 7% in a day 10 times since 1987. Easy money overheats the market, the market corrects, and then eventually, stocks return to a long-term uptrend.
Of course, it's far easier to be a long-term-oriented growth investor when stocks are going up. I wouldn't blame anyone for wanting to stay away from tech for a little while.
Today, we're going to talk about three real estate investment trusts (REITs) that are closely connected to the tech industry. American Tower (AMT -1.65%), Digital Realty Trust (DLR -1.82%), and Americold Realty Trust (COLD -0.43%) will all likely benefit from the long-term secular uptrend in e-commerce and technology, but because they own real estate, they likely won't have the same level of volatility and risk as tech stocks.
1. American Tower
American Tower is down about 15% year to date (YTD). It is an infrastructure REIT that owns 5G cell towers and data centers in 22 countries. In total, it owns about 221,000 communications site across the globe.
In a typical site, the REIT leases the ground from a third party, like a farmer or someone else who owns the land, and spends about $275,000 building the tower. It earns $20,000 per year in rent from one tenant and spends about $12,000 in operating expenses.
That said, $8,000 in profit per year is a return of just 3%. The real returns come in when American Tower can bring in more tenants to the site. Each additional tenant can add as much as $30,000 in profit with no additional costs.
In addition to the tower sites, the REIT currently owns 27 data centers and 1,800 distributed antenna systems, and 25 of those data centers came from this year's acquisition of CoreSite Realty for $10.1 billion. CoreSite's data centers are strategically located across eight big cities in the U.S., and American Tower plans to use CoreSite's expertise and its own international expertise to expand that business across the world.
Even though tech stocks have taken a hit this year, e-commerce and technology businesses are still growing. American Tower grew revenue 22% from Q1 2021 to Q1 2022. As tech continues to grow, businesses will continue using American Tower, and it can increase its tenants without having to simultaneously increase its costs much.
2. Digital Realty Trust
While American Tower is dipping its feet in the data center waters, Digital Realty is a seasoned veteran. It owns data centers in 50 cities across the world and has over 4,000 customers. Unfortunately, its stock has been thrown out like the proverbial baby with the bathwater, down about 25% YTD.
While tech stocks have fallen for legitimate reasons, like valuation, Digital Realty still has an extremely valuable asset base. Its millions of square feet of rentable space cost over $26 billion to acquire. While it is required to record that real estate at cost on its balance sheet, it's likely that many of those properties are now worth far more than the REIT paid.
Digital Realty currently trades for 2.2 times book value, and its five-year average is 2.9 times. Book value in the price/book ratio is based on Digital Realty's balance sheet, which states property at cost. Assuming that those property values have increased, along with the real estate market, the current p/b could very well be below 2. Potential reversion to the historical average of 2.9 times would give the stock a lot of room to run.
Digital Realty still has plenty of earning power too. Its Q1 2022 funds from operation (FFO) were in line with Q1 2021. Total FFO in 2021 came in at $6.36 per share. That means the stock is trading for 20.9 times FFO. That number is right in line with the index, which is around 21.
3. Americold Realty Trust
At first glance, Americold seems to be the black sheep here. Where American Tower and Digital Realty store data and work with tech companies, Americold stores something different: cold meat.
Americold is an industrial REIT that specializes in cold storage of food products. It manages 250 temperature-controlled warehouses worldwide and owns 190 of those. In addition, 201 of the warehouses are located in the U.S., with the remainder mostly in Europe and Australia.
Americold should have benefited strongly from the pandemic, as online grocery shopping hit its peak during that time. It is the go-to warehouse for cold storage in the U.S. and manages the warehouses of several big-name companies. Instead, its stock is down close to 35% over the past year.
Like many other companies, Americold's stock was hit by supply chain issues. Even in the face of rising consumer demand, the inability of food suppliers to create new products meant a decline in occupancy. Revenue was up 34.6% in 2021, but same-store growth was just 0.3%. That means all the growth came from acquisitions.
The good news is that the stock has a fairly solid base where it is now. The dividend yield is 3.5%, and it trades for just 1.7 times book value.
Going forward, the REIT is set up to benefit from e-commerce growth. According to management, normal same-store sales growth is between 2% and 4%, and net operating income grows a percent or two higher than that. When the supply chain issues totally subside, that number should be even higher. Additionally, the REIT is expanding its international operations, which may help it with a U.S.-based supply chain issue in the future.
Tech with tangible assets
None of these three REITs were insulated from the drop in tech stocks this year. Each has fallen this year, and Americold's stock has been declining for longer than that. The difference is assets. Where many tech stocks major in intangible assets, these three REITs pair intangible expertise with tangible real estate assets that should set a floor on the stock price. When tech recovers, you can expect these stocks to recover with it, but until then, you can stay patient and collect dividends.
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>>> US airlines warn C-Band 5G could cause 'catastrophic disruption'
yahoo Finance
by Igor Bonifacic
January 17, 2022
https://finance.yahoo.com/news/us-airlines-warning-letter-211919932.html
The airline industry claims a “catastrophic” event could unfold on Wednesday when AT&T and Verizon activate their new C-Band 5G networks. In a letter obtained by Reuters, the CEOs of several prominent passenger and cargo airlines, including Delta, United and Southwest, warn interference from 5G cell towers could affect the sensitive safety equipment on their planes.
"Unless our major hubs are cleared to fly, the vast majority of the traveling and shipping public will essentially be grounded," they state in the letter, which was sent to the heads of the White House Economic Council, Federal Aviation Administration and Federal Communications Commission, as well as Transportation Secretary Pete Buttigieg. "Immediate intervention is needed to avoid significant operational disruption to air passengers, shippers, supply chain and delivery of needed medical supplies."
The airlines have asked that AT&T and Verizon not offer 5G service within 2 miles of some of the country’s busiest and most vital airports. They’re also urging the federal government to ensure “5G is deployed except when towers are too close to airport runways until the FAA can determine how that can be safely accomplished without catastrophic disruption." The agency established 5G buffer zones at 50 airports on January 7th.
The letter is the latest development in the ongoing back and forth between the airline and wireless industries. AT&T, T-Mobile and Verizon spent nearly $80 billion at the start of 2021 to secure the repurposed C-Band spectrum the FCC had put up for auction. In November, AT&T and Verizon agreed to delay their C-Band rollouts to January 5th to help the FAA address any interference concerns. They later proposed limiting the power output of cell towers close to airports and agreed to a further two-week delay on January 4th.
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>>> Trump's social media deal ignites 350% gain in SPAC's shares
Yahoo Finance
by Medha Singh and Sinéad Carew
October 21, 2021
https://finance.yahoo.com/news/trump-strikes-spac-deal-social-150352200.html
(Reuters) -Former U.S. President Donald Trump's deal to create a social media app after Twitter Inc and Facebook Inc barred him won an exuberant endorsement from investors, with shares in a shell company backing the plan closing up more than 350% on Thursday after rising more than 400% earlier in the day.
Trump Media and Technology Group and Digital World Acquisition Corp, a Special Purpose Acquisition Vehicle (SPAC), announced on Wednesday https://www.reuters.com/world/us/former-us-president-donald-trump-launches-new-social-media-platform-2021-10-21 they would merge to create a social media app called TRUTH Social. Trump's company said it plans a beta launch - unveiling a trial version - next month and a full roll-out in the first quarter of 2022.
SPACs use money raised through an initial public offering to take a private company public. This deal's announcement lacked the trappings of the detailed business plans Wall Street is accustomed to in SPAC mergers, from naming a leadership team to giving detailed financing earnings and projections.
Even so, shares of Miami-based Digital World closed up 356.8% at $45.50 a share on Nasdaq after soaring more than 400% earlier in the session. At the closing price, its market capitalization stood at $1.47 billion, up from $321 million on Wednesday.
With volume of more than 477 million shares, it was the most actively traded stock on the exchange, drawing chatter on forums such as Reddit, where retail investors have driven so-called meme stocks to values not supported by mainstream financial analysis. On Twitter and Stocktwits, some users cheered the rally with posts displaying rocket ships and GIFs of Trump.
The venture may provide the first real test of the power of right-wing social media https://www.reuters.com/technology/what-is-trumps-new-venture-what-are-its-odds-success-2021-10-21 with the full force of Trump's support. Questions remain about how it plans to make money and avoid the same issues that led major social media platforms to banish him.
Some investors marveled at the rally and wondered whether the gains would last.
"I have never seen anything like this, such share reaction based on hopes and dreams," Kristi Marvin, a former investment banker who founded research firm SPACInsider, told other investors on a Twitter Spaces discussion.
Others said the market reaction reflected support for Trump as well as a bet that a platform with him would draw followers.
"Up to this point there hasn't been a publicly traded vehicle for those that support the former president," said Jake Dollarhide, co-founder of Longbow Asset Management in Tulsa, Oklahoma.
Michael O'Rourke, chief market strategist at JonesTrading in Stamford, Connecticut, said not just Trump supporters but also opponents, media and investors would want to get on the platform to keep track of what Trump says.
Still, its future is far from certain. Digital World, led by former investment banker Patrick Orlando, has launched at least four SPACs and plans to launch two more but none of them have completed a deal yet. Orlando did not immediately respond to requests for comment.
DIRECT AND UNFILTERED
People close to the Republican former president, speaking on condition of anonymity, have said Trump has sought to set up his own social media company since leaving the White House. Trump, contemplating another White House run in 2024, has been frustrated that he does not have a direct and unfiltered connection with his millions of followers after Twitter and Facebook barred him, these people said.
Social media giants suspended Trump's accounts after his supporters rioted at the U.S. Capitol on Jan. 6 following an incendiary speech he gave repeating false claims that the 2020 election was stolen from him through widespread voting fraud.
Twitter found that Trump posts violated its "glorification of violence" https://blog.twitter.com/en_us/topics/company/2020/suspension policy. Facebook found that Trump praised violence https://about.fb.com/news/2021/06/facebook-response-to-oversight-board-recommendations-trump in connection with the deadly attack in which rioters sought to block the formal congressional certification of his election loss to President Joe Biden.
In a press release announcing the deal, Trump said, "I'm excited to soon begin sharing my thoughts on TRUTH Social and to fight back against Big Tech."
Facebook shares were up 0.3%. Twitter shares were down 0.6%.
Trump Media said it would receive $293 million in cash that Digital World Acquisition had in a trust if no shareholder of the acquisition firm chooses to cash in their shares.
The soaring share price could increase the likelihood of a deal closing. Investors in the SPAC must eventually choose whether to redeem their shares at the IPO price of $10 per share, which is now much lower than the level at which what many would have bought.
Attempts to float alternatives to Twitter and Facebook have faltered in the past. Parler, a social media app backed by prominent Republican Party donor Rebekah Mercer and popular with U.S. conservatives, had several tech companies cut ties with it https://www.reuters.com/technology/parler-returns-apples-app-store-names-new-ceo-2021-05-17 after the Jan. 6 riot.
GETTR, a Twitter-style platform started by former Trump adviser Jason Miller, claimed more than 1.5 million users in its first 11 days after being launched https://www.reuters.com/world/us/former-trump-aide-miller-launches-social-media-site-gettr-2021-07-01 in July. Miller was unable to get Trump to join the platform.
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>>> AT&T Stock Hits 10-Year Low As Dividend Cut, Media Exit Test Bulls Ahead of Q3 Earnings
AT&T shares hit a fresh 10-year low Wednesday as investors re-set their expectations for the group's shift away from media assets in 2022.
The Street
Oct 13, 2021
by MARTIN BACCARDAX
https://www.thestreet.com/markets/at-t-stock-at-10-year-low-as-dividend-cut-media-exit-test-bulls?puc=yahoo&cm_ven=YAHOO
AT&T shares slumped to the lowest level in more than a decade Wednesday as investors continue to re-price the group's shift in focus from media assets to telecoms while adjusting to lower payout ratios ahead of its third quarter earnings.
AT&T has shed key assets, including DirecTV, from its balance sheet and planned the $43 billion merger of its media division with Discovery (DISCA) in a move towards its goal of becoming a so-called 'pure play' telecoms group that leverages off of 5G network growth.
While reducing debt and boosting free-cash flow prospects, the moves have come at a cost to shareholders, with AT&T noting this spring that its dividend payout ratio, which was around 63% in the first quarter, will be "re-sized" to account for the distribution of WarnerMedia assets into a new company.
The remaining AT&T assets will aim to give shareholders a dividend payout ratio of between 40% and 43%, the company said, based on anticipated free cash flow of around $20 billion, the company said.
"Bulls see the telco pure-play, lower debt leverage and a healthier dividend payout cushion using the management team’s $20 billion free-cash-flow (FCF) guidance," said Credit Suisse analyst Douglas Mitchelson in a recent client note. "Bears see profitless growth (stronger revenue/subscriber growth offset by capital investments), risks to the 2023+ FCF guidance, significant infrastructure and spectrum investment needs, and further shareholder rotation when the lower dividend kicks in, requiring a substantial yield premium."
AT&T shares closed 0.5% lower Wednesday at $25.30. The stock hit a trough of $25.01 earlier in the session, the lowest since 2010.
The stock has fallen 7.6% since trading 'ex-dividend' on October 7 ahead of cash payout of 52 cents per share expected on November 1.
AT&T will publish its third quarter earnings on October 21, with analysts currently looking for adjusted EPS of 78 cents on revenues of $39.45 billion.
"Other than cost-cutting, the company is primarily relying on Mobility revenue growth, but doing so at the expense of margins with aggressive handset subsidies (ex. iPhone 13)," Oppenheimer analyst Timothy Horan said last month. "Competition with cable/wireless is reaching a tipping point, as both are bundling the other sector's service at a discount, setting up an industry market share war probably starting earnestly in a year."
AT&T said in July that it sees consolidated revenues rising by between 2% and 3% from 2020 levels for the full year, up from its earlier forecast of 1%, with adjusted earnings rising in the "low to mid-single digits".
For the three months ending in June, AT&T posted adjusted earnings of 89 cents per share, up 7.2% from the same period last year, and stronger-than-expected group revenues of $44 billion.
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>>> Verizon Communications Inc. (VZ) offers communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. Its Consumer segment provides postpaid and prepaid service plans; internet access on notebook computers and tablets; wireless equipment, including smartphones and other handsets; and wireless-enabled internet devices, such as tablets, and other wireless-enabled connected devices, such as smart watches. It also provides residential fixed connectivity solutions, including internet, video, and voice services; and sells network access to mobile virtual network operators. As of December 31, 2020, it had approximately 94 million wireless retail connections, 7 million broadband connections, and 4 million Fios video connections. The company's Business segment provides network connectivity products, including private networking, private cloud connectivity, virtual and software defined networking, and internet access services; and internet protocol-based voice and video services, unified communications and collaboration tools, and customer contact center solutions. This segment also offers a suite of management and data security services; domestic and global voice and data solutions, including voice calling, messaging services, conferencing, contact center solutions, and private line and data access networks; customer premises equipment; installation, maintenance, and site services; and Internet of Things products and services. As of December 31, 2020, it had approximately 27 million wireless retail postpaid connections and 482 thousand broadband connections. Verizon Communications Inc. has a strategic partnership with Mastercard Incorporated. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was incorporated in 1983 and is headquartered in New York, New York.
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>>> SBA Communications Corporation (SBAC) is a first choice provider and leading owner and operator of wireless communications infrastructure in North, Central, and South America and South Africa. By Â?Building Better Wireless,Â? SBA generates revenue from two primary businesses Â? site leasing and site development services. The primary focus of the Company is the leasing of antenna space on its multi-tenant communication sites to a variety of wireless service providers under long-term lease contracts. For more information please visit: www.sbasite.com.
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>>> Crown Castle Intl (CCI) owns, operates and leases more than 40,000 cell towers and approximately 80,000 route miles of fiber supporting small cells and fiber solutions across every major U.S. market. This nationwide portfolio of communications infrastructure connects cities and communities to essential data, technology and wireless service - bringing information, ideas and innovations to the people and businesses that need them.
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>>> American Tower (NYSE:AMT)
Motley Fool
https://www.fool.com/investing/2021/09/04/3-recession-ready-stocks-to-buy-in-month-due-830/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
American Tower is a cellphone tower REIT that's benefiting from increasing demand for mobile data. The company's biggest customers are AT&T, T-Mobile, and Verizon, which account for 89% of its revenue combined. These companies lease space on American Tower's transmission towers. Like Realty Income, American Tower benefits from highly stable customers.
American Tower is insulated from the ebbs and flows of the economy because of consumers' voracious appetite for mobile data. On the company's first-quarter earnings conference call, it said that the average smartphone user consumes 15 gigabits per month, and it expects that number to grow to 50 gigabits per month by 2026, which works out to a 27% cumulative average growth rate.
While most investors consider American Tower a growth stock (which makes sense), it also rewards its shareholders with income. The company has hiked its dividend every quarter since April 2012. The company is guiding for 2021 AFFO per share to rise to $9.50 per share, which gives the stock a multiple of 31 times AFFO per share. Again, this is toward the high end of its historical range. The dividend yield is 1.8%, which is small for a REIT, but you are getting 12% annual AFFO per share growth, and a longer-term growth story. Historically, American Tower has traded with a dividend yield between 1.4% and 2.25%, so the stock is in the middle of its range.
American Tower and Realty Income are both trading on the high side of their historical valuation range. That's typical when the stock market's trading at record highs; every potential stock investment will seem expensive compared to historical multiples.
Keep in mind that these stocks have resilient business models that will perform well even in a recession. If the economy goes into a recession, expect their price-to-earnings ratios to fall, but the businesses themselves should hold up despite the economy. Investors can't really escape overall multiple compression without trying to time the market, which is generally a losing proposition..
Duke Energy and Realty Income are good income stocks that will hold up reasonably well if we get another outbreak of COVID or the economy weakens materially. Think of them as income stocks that double as defensives. American Tower is a growth stock, and revenues should continue to grow as the market for mobile data increases.
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>>> Global X Data Center REITs & Digital Infrastructure ETF (VPN)
https://finance.yahoo.com/quote/VPN/profile?p=VPN
>>> The investment seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Data Center REITs & Digital Infrastructure Index. The fund invests at least 80% of its total assets, plus borrowings for investments purposes, in the securities of the Solactive Data Center REITs & Digital Infrastructure Index and in ADRs and GDRs based on the securities in the index. The index is designed to provide exposure to companies that have business operations in the fields of data centers, cellular towers, and/or digital infrastructure hardware. The fund is non-diversified.
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Twilio - >>> Stocks That Can Double Again in 2021
More than 300 stocks with market caps greater than $300 million have doubled in 2020. Let's take a look at some that can do it again next year.
Motley Fool
12-15-20
by Rick Munarriz
https://www.fool.com/investing/2020/12/15/3-stocks-that-can-double-again-in-2021/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article
Twilio stock has more tripled in 2020, and the reason is probably as close as what's in your hand right now. Your smartphone has become a new appendage, an indispensable tool to keep you connected, informed, and entertained throughout the day. Twilio is a star in your phone, even if most people have never heard of the company.
Twilio is the top dog when it comes to in-app communication tools. The next time you get a notification that your ridesharing driver has arrived, or you reset a streaming platform password without leaving the app, there's a good chance that Twilio is the one making the connection. Video communication solutions have become a shooting star for the company in 2020.
Revenue rose a better-than-expected 52% in its latest quarter. Analysts were only holding out for a 39% year-over-year increase, but that's just nonsense. Twilio's revenue has risen by 41% or better every single quarter since the company went public four years ago. Some winners just keep winning.
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>>> Twilio delivers another fantastic year
https://www.fool.com/investing/2020/12/23/2-growth-stocks-that-tripled-2020-still-worth-buy/
Cloud communications specialist Twilio has had another solid year, despite a shaky start. The earnings guidance it issued at the beginning of 2020 was met with lukewarm guidance, but the company has got its act together with terrific growth quarter after quarter.
Twilio's revenue shot up 52% year over year in the third quarter of 2020, thanks to a 21% increase in the number of active customer accounts as well as an increase in purchases by existing customers. The company anticipates $450 million to $455 million in revenue this quarter, an increase of 36% to 37% over the prior-year period.
If Twilio hits the midpoint of its fourth-quarter guidance range, its full-year revenue would increase by around 48% compared to 2019 levels. But it won't be surprising to see Twilio exceed its own expectations, as the recently completed acquisition of customer data provider Segment for $3.2 billion is likely to open up additional cross-selling opportunities for the company.
Segment is expected to boost Twilio's market opportunity by $17 billion and add to the terrific momentum the company is already witnessing. That's because the customer data platform market is expected to hit $10 billion in size by 2025, compared to $2.4 billion last year, per a third-party estimate.
Additionally, Twilio now has a new service for its existing customers. This could help Twilio further boost its dollar-based net expansion rate -- a metric that rises when the company's existing customers buy additional offerings or increase their spending on its services. As the chart below shows, Twilio's dollar-based net expansion rate has started creeping up of late, while the number of active customer accounts has moved north consistently.
The addition of Segment into the mix could lead to further growth in the purchases made by Twilio customers. Segment should also help the company boost its customer base because of the fast-growing market that it operates in.
In all, the addition of a new growth avenue and the growing adoption of cloud contact centers in the wake of the COVID-19 crisis could help Twilio switch into a higher gear and exceed the 30% annual revenue growth rate that it currently expects to clock over the next four years. All of this makes Twilio a tech stock that's worth holding on to, even after a terrific 2020 as the New Year could bring more good news for investors. <<<
>>> Twilio Inc. (TWLO), together with its subsidiaries, provides a cloud communications platform that enables developers to build, scale, and operate communications within software applications in the United States and internationally. Its customer engagement platform provides a set of application programming interfaces that handle the higher level communication logic needed for nearly every type of customer engagement, as well as enable developers to embed voice, messaging, and video capabilities into their applications. The company was founded in 2008 and is headquartered in San Francisco, California. <<<
Verizon - >>> 3 Stocks to Buy and Hold for the Next 50 Years
Only a handful of companies are as ready for the unknowns ahead as they are the knowns.
Motley Fool
James Brumley
Sep 24, 2020
https://www.fool.com/investing/2020/09/24/3-stocks-to-buy-and-hold-for-the-next-50-years/
In today's media-driven market, investors struggle to look more than 50 days down the road, let alone 50 years. But that's probably the timeframe most of us should be thinking about with our picks -- constantly swapping stocks in search of the next hot name can nickel and dime a portfolio to death.
To that end, investors with enough discipline (and time) to sit tight for the next 50 years may want to consider stepping into Microsoft (NASDAQ:MSFT), American Water Works Company (NYSE:AWK), and Verizon Communications (NYSE:VZ) sooner rather than later. In their own way, each offers something that will allow it to withstand the tough test of time.
Microsoft
Why it's built to last: Microsoft is entrenched into the tech we rely on every single day
A decade ago, software giant Microsoft looked like a has-been. It wasn't a player in the then-young smartphone market, free office productivity software was a threat to an important piece of its business, the personal computer market was peaking, and most of the world was still trying to figure out exactly what the term "cloud computing" even meant.
When Satya Nadella was named CEO in 2014, he addressed all of those challenges.
He didn't address all of them directly, to be clear. Microsoft is largely out of the smartphone business after its somewhat disastrous experiment in the arena. And, while the PC market's long contraction finally seems to be leveling off, the company doesn't seem to see its Windows operating system as a growth engine in and of itself. Rather, it's a clever means to an end. The Windows OS readily supports use of Microsoft's cloud-based office software Office 365, which is sold on a subscription basis rather than as a one-time purchase. During its most recent reported quarter, this online version of Office was being utilized by 42.7 million consumers and an untold number of businesses, making up the lion's share of $11.8 billion worth of recurring revenue collected by the company's Productivity and Business Processes arm.
Then there's the Microsoft you don't see. If you're a regular user of any cloud service, there's a good chance Microsoft's Azure is being used to help you digitally connect with a company's servers. Microsoft's Intelligent Cloud division produced revenue growth of 17% for the three-month stretch ending in June. A big chunk of that is recurring revenue as well. The company's cloud-management software, Azure, is the only one among the majors that grew market share during Q2, according to Canalys data.
Obviously competition exists, and markets change over time. Unless individuals and enterprises stop using technology, though -- and mobile technology in particular -- Microsoft's always going to have a market to sell something to.
American Water Works
Why it's built to last: Water utilities are practically a legal monopoly
The average person living in the U.S. consumes between 80 and 100 gallons of water per day, according to the United States Geological Survey Agency, with most of us not giving it a second thought. If we were to shut that water off for just a few hours, though, most of us would probably go mad due to sheer inconvenience! Consumers may postpone the purchase of a car or skip a vacation, but they're not going to live without water.
That reality puts water utility names like American Water Works in an enviable position, and the company's got the numbers to prove the power of this demand dynamic. In only two quarters of the past ten years has American Water Works reported year-over-year revenue declines. Ditto for gross profits, or what's left after paying for the purification and delivery of water through its pipe networks.
That consistent success has a lot to do with how the water utility business works. Most municipalities oversee local service providers, and approve any rate hikes. They rarely reject price increases, though. Water market industry researcher Circle of Blue notes that in every year since 2010, the average U.S. household's water bill has gone up. Theoretically, a competitor could step in and undercut an incumbent's rates. But transferring control of localized infrastructure can be more complex than it's worth.
There are several viable water utility stocks to choose from, but American Water Works is compelling because it's the biggest and can throw its weight around.
Verizon
Why it's built to last: New technologies perpetually offer Verizon something better to market
Finally, add telecom powerhouse Verizon to your list of stocks to sit on for 50 years or more.
It's admittedly a tough idea to embrace... on the surface. Telecom is essentially a commodity, and generally priced as such. That is to say, Verizon and its competitors sell the same basic product for about the same price.
Under the surface, though, telecom is anything but a simple commodity. Not only is there a limited amount of spectrum (radio frequencies needed to connect wireless devices to networks) to work with, new technologies are forever changing how telecom service works.
Case in point: 5G. Yes, wireless consumers are now offered 5G service, but that's not the company's 5G highlight. Verizon is thinking about far more powerful uses of this tech. For instance, earlier this month the company announced success with trials of 5G solutions optimized for use in facilities like hospitals, factories, and schools. With this ultra-high-speed wireless connectivity, the era of the Internet of Things can finally be ushered in as envisioned; complex and geographically sprawling organizations can manage all of their employees and equipment, and optimize them remotely. It even means wireless at-home broadband is now a viable option.
The thing is, 5G wasn't even on the radar a decade ago. There will always be something new to keep Verizon on the cutting edge of communications.
One could argue that rival AT&T is just as capable, but there's a stark difference between Verizon and AT&T. That is, AT&T remains deep in debt, and bogged down by the struggling DirecTV business it's reportedly trying to shed. It's also working hard to make the most of its 2018 acquisition of Warner Media, launching streaming platform HBO Max in May of this year. That's a big and somewhat distracting bet, though. Verizon is better off staying focused on doing one thing well, and not getting sucked into a brutal video entertainment war.
The dividend yield of 4.2% isn't too bad either, especially considering the company's raised it every year for the past 13 years.
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>>> AT&T, Ready for Your $30 Billion DirecTV Haircut?
Bloomberg
by Tara Lachapelle
August 31, 2020
https://finance.yahoo.com/news/t-ready-30-billion-directv-103007173.html
(Bloomberg Opinion) -- AT&T Inc. is once again looking to sell its DirecTV unit, a business that has lost billions of dollars in value since the wireless carrier acquired it in 2015. The sooner it waves goodbye, the better. The question is, who wants it?
DirecTV has faded into the background at AT&T, a company now entirely focused on competing in 5G wireless connectivity and online television. Any DirecTV user can attest to how the service has been neglected in recent years, and the business might be forgotten by investors if it weren’t for the headline-grabbing subscriber losses it’s mounted each quarter.
AT&T, which also owns the U-Verse brand, has lost about 6 million traditional pay-TV customers overall in just the last two years. The Covid-19 pandemic is causing cord-cutting to accelerate as consumers look to save money by switching to streaming-video services such as Netflix and AT&T’s own HBO Max. So while AT&T paid $49 billion when it bought DirecTV, it’d be lucky to fetch even half that now. One analyst, John Butler of Bloomberg Intelligence, estimates a potential sale price of just $20 billion.
Some may be wondering, what on earth would any buyer want with a satellite-TV business anyway? The answer is cash. DirecTV still throws off quite a bit of it, which explains why private equity firms including Apollo Global Management Inc. and Platinum Equity are said to be taking a look. Financial suitors want businesses that generate lots of cash because they can support dividends and the debt load needed to take them private — although DirecTV’s ability to do so is certainly diminishing.
Cash is one reason AT&T has waffled over whether to part with DirecTV; its earnings help the parent company chip away at its own mountain of debt. According to a Los Angeles Times article in January, AT&T said that DirecTV had generated $22 billion of cash flow since 2015. But now that Randall Stephenson, the CEO who bought DirecTV, has retired, and AT&T has a new linear TV product called AT&T TV, it no longer makes sense to hold on to a tired brand. DirecTV also won’t rebound after the pandemic, and given the uncertainty around sports, there’s now a question mark on the value of its NFL Sunday Ticket package.
Satellite TV does continue to serve a crucial demographic: rural America. There, streaming apps often aren’t an option; instead, the choice is between DirecTV and Dish Network Corp. In fact, roughly half of satellite churn is back and forth between DirecTV and Dish, according to a research report last September by Craig Moffett of MoffettNathanson LLC. As they both try to offset subscriber shortfalls and higher programming costs, DirecTV has turned to price hikes and Dish has embraced channel blackouts. This is why Dish has long been considered the most obvious merger partner for DirecTV, an idea that seems to have been deterred only by the regulatory hurdles. So even as AT&T holds formal discussions with private equity suitors, there would seem to be a high likelihood that Dish billionaire Charlie Ergen also joins the fray. The satellite business may be the awkward sibling of the AT&T family, but it’s a piggy bank for Ergen’s desire to launch his own 5G wireless network.
This may be the last chance for DirecTV and Dish to strike a deal. The U.S. Justice Department and Federal Communications Commission’s approval of T-Mobile US Inc.’s purchase of Sprint Corp., which was backed by a court ruling this year, opened the door to other mergers between direct rivals in highly concentrated markets. That lax approach to antitrust may end, though, if Joe Biden defeats Donald Trump for the presidency in November. Representative David Cicilline, a Rhode Island Democrat leading a House investigation into Big Tech’s anticompetitive practices, told Bloomberg News last week that Biden would likely pursue an aggressive antitrust policy.
While a group of state attorneys general were unsuccessful in trying to block T-Mobile’s takeover of Sprint, their efforts signaled that states are willing to step in when they see regulators drop the ball. As AT&T Chief Financial Officer John Stephens noted in an interview in January, contending with antitrust matters now means squaring off against the “three-headed monster” of the DOJ, FCC and states. “Or maybe a 52-headed monster, I should say,” he added.
AT&T may not want to take the risk of that monster coming after it — again. Its $109 billion deal for WarnerMedia (then called Time Warner Inc.) got tied up in a legal battle with the Justice Department for well over a year. New CEO John Stankey, who oversaw that effort, probably doesn’t want a repeat. The company has enough on its plate, with the virus halting productions at WarnerMedia and starving HBO Max of content. Considering AT&T’s $178 billion of net debt, including lease obligations, it’d be prudent to sell DirecTV to whoever offers a combination of best price and best chances of getting a deal done quickly.
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The 3 Best Monthly Dividend Stocks to Buy Right Now:
Shaw Communications $SJR:
>>> Verizon - >>> 3 Recession-Proof Stocks to Buy Now
These companies will likely prosper in almost any economic environment.
Motley Fool
Will Healy
Jun 7, 2020
https://www.fool.com/investing/2020/06/07/3-recession-proof-stocks-to-buy-now.aspx
Verizon has struggled somewhat recently as declining margins in its wireless business and massive investments in 5G infrastructure weighed on the company. Last year alone, Verizon spent $17.9 billion on capital expenditures. This has contributed to the company's $106.56 billion long-term debt load. It also represents a significant burden for a company worth $61.65 billion after subtracting liabilities from assets.
Still, it does not have the much higher debt load and side business distractions of archrival AT&T (NYSE:T). Moreover, consumers need communication and internet connectivity in good times and bad. Even if the economy continues to struggle, the march to 5G will probably continue and the need for smartphones and internet connectivity will be there.
And Verizon has an investing advantage over its other big rival, T-Mobile (NASDAQ:TMUS), as Verizon's shareholders receive a dividend. Verizon paid out $2.46 per share last year and its payout yields about 4.3%. This payout has risen every year for more than a decade. The dividend claims about 51.7% of company profits, leaving plenty of free cash flow left over for infrastructure spending, debt paydown, dividend increases, and other investments.
This has left Verizon the growth-and-income play of the wireless industry. Verizon has risen by about 121% over the last 10 years. While that does not beat T-Mobile, it comes out well ahead of AT&T, which (with its dividend yield of about 6.6%) is primarily an income play.
In addition to a generous payout, the company sells for just 11.9 times forward earnings. Admittedly, some may sour on Verizon as analysts see profit growth averaging 1.9% per year over the next five years. Still, with 5G adoption expected to grow for years to come, Verizon should keep producing growth and income regardless of the broader economy's performance.
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>>> Zoom’s valuation has entered ‘uncharted territory:' Analyst
by Ines Ferré
Yahoo Finance
June 3, 2020
https://finance.yahoo.com/news/zoom-valuation-has-entered-uncharted-territory-analyst-190931059.html
Video conferencing giant Zoom (ZM) delivered a blow-out first quarter, but the stock’s “valuation is hard to justify,” warns Dan Romanoff, analyst at Morningstar.
Zoom’s revenue last quarter jumped 169% year over year as the COVID-19 pandemic forced people to work from home. Not only has Zoom’s customer base surged, so has its stock price. Year-to-date shares of Zoom are up more than 220%.
“We are in un-chartered territory model-wise after huge quarterly upside in the face of the COVID-19 recession along with sharply higher guidance,” wrote Romanoff, noting Morningstar raised its new fair value estimate on the stock from $62 to $116. Shares are currently trading around $220.
“We note shares have approximately tripled year to date thus far, so even allowing for a complete model reset, we still cannot come close to supporting the current share price within the context of our DCF model,” wrote Romanoff. DCF refers to ‘discounted cash flow,’ a metric used to value a company based the present value of its expected future cash flows.
Romanoff goes on to highlight “two related controversies” surrounding the stock: How rapidly Zoom’s user-base will grow, and how long robust growth can continue.
Zoom notes the number of customers with more than 10 employees grew 354% from the same period a year ago. The company also highlighted clients paying more than $100,000 grew 90% year over year to 769 customers.
“Clearly larger customers added meaningfully to their seat count,” wrote Romanoff.
As for the software’s security issues raised earlier this year, the analyst says those have largely been addressed. Zoom upgrades and its recent acquisition of startup Keybase for encrypted communications has helped it gain back the approval of The New York City Public School System which is allowed to use the software again.
As for guidance, the company substantially lifted the range for its full year revenue, coming in far above Street estimates.
Still, Romanoff warns Zoom is still in the early stages of its life cycle, which trades at higher multiple to peers.
“While the company is expected to produce revenue growth at the high end of peers and the premium may be justified, higher absolute valuation offers less room for missteps and therefore carries greater inherent risks,” wrote the analyst.
“At high valuation levels, companies can often become momentum stocks that are punished severely if they do not deliver against expectations, which are regularly higher than consensus,” he added.
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>>> Zoom Video Communications, Inc. (ZM) provides a video-first communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company's product portfolio includes Zoom Meetings that offers HD video, voice, chat, and content sharing through mobile devices, desktops, laptops, telephones, and conference room systems; Zoom Phone, an enterprise cloud phone system that provides secure call routing, call queuing, call detail reports, call recording, call quality monitoring, voicemail, switch to video, and other services, as well as inbound and outbound calling services; and Zoom Chat enables sharing messages, images, audio files, and content in desktop, laptop, tablet, and mobile devices for meeting and phone customers. It also offers Zoom Rooms, a software-based conference room system; Zoom Conference Room Connector, a gateway for SIP/H.323 endpoints to join Zoom meetings; and Zoom Video Webinars enables users to conduct large-scale online events, such as town hall meetings, workshops, and marketing presentations. In addition, the company provides Zoom for Developers that allows developers to integrate its video, phone, chat, and content sharing into other applications, as well as manages Zoom accounts; and Zoom App Marketplace enhance developers to publish their apps. It serves education, entertainment/media, enterprise infrastructure, finance, government, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries, as well as individuals. The company was formerly known as Zoom Communications, Inc. and changed its name to Zoom Video Communications, Inc. in May 2012. Zoom Video Communications, Inc. was founded in 2011 and is headquartered in San Jose, California.
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American Tower - >>> 3 Stocks to Hold for the Next 20 Years
Investors need to look for companies with a track record of stability and resilience as key attributes.
Motley Fool
Royston Yang
May 21, 2020
Ideally, as an investor you should consider holding stocks over years, even decades. The magic of compounding will provide you with a substantial nest egg to enjoy your golden years, while a growing income stream from dividends provides a hedge against inflation. However, it's important not to buy and own the wrong companies. Doing so will result in poor or even negative returns and may destroy your capital over time.
So, what attributes do great companies have? They should have a strong competitive advantage, market share, and a high level of resilience. These attributes will allow them to weather crises over the years and yet emerge unscathed or even stronger. Companies with such attributes are usually large, with a long track record of growth and stellar financial performance. Size confers an advantage as it allows them to dominate the industry they are in and continue to lead the pack.
Here are three examples of stocks that you can hold for the next two decades.
Mastercard
Mastercard (NYSE:MA) is a market leader in the financial services and payments industry. The company acts as an intermediary between banks and end customers by providing a secure platform for transaction and payments processing. For the first quarter of the fiscal year 2020, the company processed a gross dollar volume of $1.56 trillion worth of transactions, up 8% year over year. The number of cards in circulation grew 5% year over year to 2.6 billion.
Mastercard is a market leader in cashless transactions. With more countries modernizing and shifting to paperless transactions, the future looks bright for the company despite the short-term effect of the COVID-19 pandemic. Because of the pandemic, the company has temporarily suspended its share repurchase program. Dividend per share has been maintained at $0.40 per quarter as the business continued to generate strong operating cash flow of $1.9 billion. With strong tailwinds for its business and a robust balance sheet, Mastercard is a company you can own for the long term without losing sleep.
Nike
Nike (NYSE:NKE) is a market leader in the design and manufacture of sports footwear and apparel. The company has retail stores located around the globe and reported growth in revenue and net income of 7% and 10% respectively for the first nine months of the fiscal year 2020.
Though Nike has had to temporarily close stores in China, North America, and other parts of the world due to COVID-19-related lockdowns, the company has managed to tap on its digital sales platform to sell its products. Digital sales were up 36% year over year during the quarter , and CEO John Donahoe has reiterated the company's commitment to invest in the Nike Direct online platform and the Nike app. Digital is the company's fastest-growing channel, and owned and partnered digital sales represent more than 20% of overall revenues.
Nike is also famous for its innovation in running shoes. A few months ago, the new Nike ZoomX Vaporfly NEXT% was touted as one of the best running shoes ever made, with people going so far as to claim it gives athletes an unfair mechanical advantage. The company has just devised a new self-lacing shoe called HyperAdapt 1.0 that electronically adjusts to the contours of your foot and offers style in addition to comfort.
Investors can rest assured that the company's innovative culture and loyal fan base make the company an attractive one to own for the long term.
American Tower
American Tower (NYSE:AMT) is an owner and operator of a portfolio of roughly 180,000 communication sites that are leased to wireless service providers and communication companies. The company is incorporated as a real estate investment trust and is mandated to pay out 90% of its annual taxable income as dividends.
Over the years, American Tower's dividend has grown impressively by around 22.8% per annum over the last seven years, from $0.90 per share in 2012 to $3.78 in 2019. The company has achieved this through acquisitions of cell towers in emerging markets and by increasing the number of tenants using the same tower (thereby improving the return on investment for each tower).
With the expected investment by telecommunication companies in the development of 5G network technology, American Tower can expect an extended period of solid growth. This catalyst can allow the company to grow for many more years, and investors can look forward to continually growing dividends.
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>>> Cell Tower REITs: For 5G, 4 Beats 3
Seeking Alpha
Aug. 2, 2019
https://seekingalpha.com/article/4280713-cell-tower-reits-for-5g-4-beats-3
I do! The long-anticipated marriage between T-Mobile and Sprint appears more certain than ever after clearing regulatory hurdles from DOJ and FCC, setting-up a final battle with state attorney generals.
An unexpected coup for cell tower REITs, the approval is conditional on the facilitated creation of a fourth competitor. Dish’s viability as a national carrier, however, is an unknown wildcard.
For cell tower REITs, four competitors are better than three, and three beats two. Even if Dish’s ambitious plans fail to materialize, a strong combined T-Mobile avoids a possible duopoly.
Dish needs a well-capitalized partner or acquirer to have any real shot at success, something that T-Mobile negotiators have walked a tight-rope with regulators to try to prevent.
Powered by the network densification required by the early roll-out of 5G, cell tower fundamentals remain white-hot. We discuss four possible merger scenarios and their impact on the sector.
This idea was discussed in more depth with members of my private investing community,iREIT on Alpha.
REIT Rankings: Cell Towers
In our REIT Rankings series, we introduce and update readers to each of the commercial and residential real estate sectors. We analyze REITs within the sectors based on both common and unique valuation metrics, presenting investors with numerous options that fit their own investing style and risk/return objectives. We update these rankings every quarter with new developments.
Cell Tower Sector Overview
Cell tower REITs comprise roughly 10% of the REIT ETFs (VNQ and IYR). Within the Hoya Capital Cell Tower REIT Index, we track the four cell tower REITs which account for roughly $175 billion in market value: American Tower (AMT), Crown Castle (CCI), SBA Communications (SBAC) and Uniti Group (UNIT). While cell towers only constitute a tiny portion of total real estate asset value in the United States, cell towers constitute disproportionately high importance in the market capitalization-weighted investible real estate indexes with American Tower and Crown Castle as the two single largest REITs. Investors seeking focused exposure to this sector should consider the Benchmark Data & Infrastructure Real Estate ETF (SRVR), which also includes exposure to the Data Center REIT sector.
cell tower REITs
Cell Tower REITs primarily own "macro" communications towers that host cellular network broadcast equipment from AT&T (T), Verizon (VZ), T-Mobile (TMUS), and Sprint (S), but Crown Castle and Uniti Group also have significant investments in fiber and small-cell networks. American Tower and SBA Communications focus on macro tower sites, but each also has significant international operations. Typically viewed as growth-oriented REITs that pay relatively low dividend yields but command superior growth profiles, cell tower REITs are among the newest REIT sector, emerging after American Tower converted to a REIT in 2012 followed by Crown Castle in 2013 and SBA Communication in 2017.
cell tower REIT 101
Cell Tower REITs have been among the best-performing sectors over the past four years, powered by the network densification required by the early stages of the 5G rollout. More than any other real estate sector, cell tower ownership is highly concentrated. Cell tower REITs own roughly 50-80% of the 100-150k investment-grade macro cell towers in the United States and due to this market power and significant barriers to entry, are perhaps the only real estate sector that could be classified as true price makers rather than price takers.
cell tower sites
Consumers want both speed and mobility, but because of the physics and economics of data transmission, there is often a tradeoff between the two. For pure speed and low-latency, a robust fiber-based or dense 5G small-cell network is ideal. This requires laying thousands of miles of underground cables and/or having hundreds of thousands of small-cell base stations using high-band spectrum. For pure mobility, a wide-reaching macro cellular network using high-powered transmitters at lower and farther-reaching spectrum is ideal. This requires having a network of macro towers, but each tower is capable of servicing tens of thousands of devices each, rather than several dozen or hundreds of customer per small-cell antenna. Since consumers need both speed and mobility and none of the players are able to fully satisfy both of these needs, a blend of different technologies- including macro cell networks- will continue to be used to meet the growing demand for data connectivity.
Cell tower REITs continue to command strong competitive positioning in the telecommunications sector. Cell carriers sold off their tower assets beginning in the mid-2000s to de-lever their balance sheet and free-up capital to expand their networks. Supply growth is almost non-existent in the US as there are significant barriers to entry through the local permitting process and due to the economics of colocation versus building single-tenant towers. The relative scarcity of cell towers, combined with the absolute necessity of these towers for cell networks, has given these REITs substantial pricing power even as the number of potential tenants has dwindled down to just four national carriers over the last two decades. The equity sector that we think has the most upside potential from the growth of wireless communications and the 5G revolution, cell tower REITs have benefited from the increase in network spending from the four national carriers during the early stages of the 5G rollout.
network spending
Relative to other real estate sectors and their cellular carrier tenants, cell tower ownership is a high margin business with significant operating leverage driven by upgrading adding additional multiple tenants to existing towers. EBITDA margins typically average around 60-65% for the sector, towards the higher-end of the real estate universe. Multiple tenants typically lease space on the cell tower with rental rates based on property location and the amount of equipment on the tower or on the ground site below. Cell tower leases are typically 5-10 years with annual fixed-rate escalators with multiple renewal options. Cell tower REITs only own about one-third of the land under the towers and control the rest through long-term ground leases, a source of potential long-term risk.
cell tower REIT operating costs
It's almost a done deal. In an announcement last week, the US Department of Justice indicated that it would approve the long-anticipated merger between the third and fourth-largest US wireless carriers, Sprint and T-Mobile. An unexpected coup for cell tower REITs who risked losing one of the four possible tenants, the approval is conditional on the facilitated creation of a fourth competitor. As it currently stands, revenues from Sprint and T-Mobile comprise a combined 26% of total industry revenues, but the “overlap” between Sprint and T-Mobile cell tower sites is roughly 4% of total industry revenues.
As we discussed in our last update, there was much debate over the long-term competitive dynamics under different merger scenarios (none of which involved the creation of a fourth competitor), including the possibility that an outright rejection of the merger may lead to an even less desirable competitive dynamic in which Sprint and T-Mobile's lag further behind, lacking the capital needed for a full 5G rollout to keep up with AT&T and Sprint, leading to an effective duopoly in the wireless space.
We postulated that cell tower REIT investors should probably be rooting for a merger approval with that caveat that a "best case" alternative would be that a well-capitalized and motivated partner emerged to "rescue" Sprint including Comcast (CMCSA), Charter (CHTR), Amazon (AMZN), Apple (NASDAQ:AAPL), or Google (GOOG). As it currently stands pre-merger, Sprint and T-Mobile lag significantly behind in the all-important postpaid phone category but have sizable market share in the lower-value prepaid category.
market share cell carriers
While cell tower REITs have been bid-up on merger optimism, Dish Network's (DISH) viability as a national carrier is an unknown wildcard. Dish, which has acquired rights to of billions of dollars in wireless spectrum over the past decade and has roughly 12 million TV subscribers, would acquire Sprint's 9 million prepaid customers for $1.4 billion. Additionally, T-Mobile would be required to offer wholesale services to Dish for seven years, allowing Dish customers to utilize the full T-Mobile/Sprint network. Dish, however, cannot sell its wireless business or newly acquired assets to a third party for at least three years.
As part of the agreement, Dish would effectively promise to make good on its ambitious proposal to cover 70% of the population with a 5G network by June 2023, a rollout that Dish estimates would cost $10 billion, but that analysts believe will cost many multiples more considering that Verizon and AT&T spend roughly $15-20B per year simply upgrading their existing national network. We estimate that a true national buildout of this magnitude would require closer to $50-75B over the next five years. If the deal does indeed go through as-is, the wireless market would be comprised of three roughly equal competitors with a distant, upstart fourth.
wireless market share after deal
One key hurdle remains for the proposed $27B deal, as more than a dozen state AGs are engaged in a lawsuit to block the deal, citing concerns over reduced competition. These AGs, along with many analysts and industry observers, are skeptical that Dish is truly a viable long-term competitor considering its already burdensome debt load and lack of operational expertise in managing a national wireless network. Particularly scrutinized are the stipulations that limit Dish's ability to partner with a third-party, presumably written by T-Mobile's negotiation team to prevent the likes of Amazon, Apple, or Google from seizing the opportunity to enter the wireless space.
The situation remains fluid and cell tower REIT investors are holding out hope that the viability of Dish can be enhanced by additional concessions. As we explained in our last update, evaluating the impact of different merger scenarios on cell tower REITs on the proliferation of 5G requires making forecasts and assumptions that are anything but certain. To help evaluate the impact on cell tower REITs and 5G, we detail four possible scenarios.
Scenario 1: Merger Approved As-Is, But Dish Can't Find A Partner
The cellular carrier industry would be consolidated into three players of roughly equal size with a distant fourth competitor that lacks the financial or operational ability to run a national network. Limited in their ability to partner with a third-party and restricted by the terms of the concessions from T-Mobile and Sprint, Dish becomes a niche player and is unable to fulfill their promise of 70% coverage by 2023, choosing instead to pay the fine to the US government. However, with more balance sheet capacity, the merged T-Mobile ramps up network spending in line with Verizon and AT&T, which would translate into an immediate boost to cell tower REIT revenues. With one less competitor, the 5G rollout begins sooner but is focused on higher-value markets and consumer pricing would likely become marginally less competitive, translating into higher margins for carriers, but potentially fueling further network investment. Over time, however, the competitive positioning of cell tower REITs would be slightly diminished. Carrier initiatives to gain leverage over cell tower REITs, including building their own towers or taking over ground leases from REITs, would be incrementally more successful and growth would moderate but remain at above-inflation levels due to the still-favorable competitive positioning.
Probability: 45%. For Cell Tower REITs: Decent/Default Outcome.
Scenario 2: Merger Approved, Dish Finds A Partner
To get final approval from the state AG's, T-Mobile agrees to further concessions that would make sure Dish has a fighting chance. This would likely involve removing the limits on Dish's partnership ability or sale of assets and potentially granting more extensive access to the T-Mobile network. An outcome that the carriers hope to avoid but that cell tower REITs investors are cheering for, Dish finds a partner in Comcast, Charter, Amazon, Google, or Apple and the entity quickly becomes a legitimate fourth competitor in the wireless carrier space. The well-capitalized carriers battle to become leaders in 5G and access is widespread and pricing remains competitive. Initiatives to gain leverage over cell tower REITs are largely unsuccessful and pricing power for cell tower REITs remains strong.
Probability 35%. For Cell Tower REITs: Best Outcome.
Scenario 3: Merger Rejected – Sprint Finds A Partner
The merger gets rejected, but as Dish was seeking to do, Sprint is able to find a suitor or partner. Sprint's underpriced and valuable network and spectrum assets are attractive to cable broadband providers who recognize the mounting and legitimate threat from 5G fixed wireless broadband, which we believe to be underappreciated by the market. Alternatively, a cash-flush technology company sees the assets as an underpriced complement to their existing data center infrastructure and a new source of distribution to mitigate the competitive threats from the incumbent broadband providers. Sprint is able to leverage this partnership to become a legitimate competitor in the space. Meanwhile, T-Mobile continues its strong run of adding customers at sector-leading rates. The carrier industry remains at four players with T-Mobile and Sprint close behind and consumer pricing competition remains strong. The four carriers battle to become leaders in 5G and access is widespread. Initiatives to gain leverage over cell tower REITs are largely unsuccessful and pricing power remains strong.
Probability 10%. For Cell Tower REITs: Very Good Outcome
Scenario 4: Merger Rejected – Sprint Fails
The merger gets rejected Sprint is unable to find a suitable partner. Sprint's investors, including SoftBank, scale back their investment and the network falls further behind the other three carriers and continues to lose customers until being unable to operate any longer. In bankruptcy, Sprint's assets are distributed around the telecom sector including to AT&T and Verizon, further strengthening their grip on the emerging duopoly. T-Mobile's strong run of performance slows down and cannot keep up with the network spending of the two major players without the complementary asset of Sprint. The carrier industry becomes a de facto duopoly and cell tower REIT competitive positioning is significantly diminished. Consumer pricing becomes significantly less competitive and the 5G rollout continues but is isolated only to the most high-margin deployments. Carrier initiatives to gain leverage over tower REITs are largely successful and the industry becomes more akin to the data center REIT sector over the past several years with below-inflation internal growth rates and weak pricing power over increasingly dominant tenants.
Probability 10%. For Cell Tower REITs: Worst Outcome.
In summary, for cell tower REITs, four competitors is better than three, but three definitely beats two. The way that we see it is that even if Dish’s ambitious plans fail to materialize, a strong combined T-Mobile avoids a possible duopoly, which would be a worst-case outcome for cell tower REITs, cell customers, and the proliferation of 5G. Many pieces have to fall into place for there to be four viable wireless network competitors in the United States, but that probability is greatly enhanced if the expected growth of additional applications for cell-based wireless networks come to fruition including fixed wireless broadband and the Internet of Things.
As discussed in our last update, we believe that fixed wireless broadband will be the true "killer app" for 5G that could take significant market share away from traditional cable broadband providers. If indeed these carriers can make inroads into the home broadband business, there is no reason that industry revenues could not support four or more competitors. The question is: will four carriers be around long enough to realize that secular tailwind?
Cell Tower REIT Fundamentals
Beneath the noise of the merger frenzy, cell tower REITs delivered another stellar second quarter. All three cell tower REITs beat AFFO estimates and raised full-year AFFO per share guidance as the early effects of network densification to fuel 5G networks powered above-trend organic growth. Organic tower revenue, effectively the same-store NOI equivalent, continues to grow at a sector-leading 6%+ rate as carriers continue to invest heavily in network densification and equipment upgrades. With the high degree of operating leverage inherent with the colocation tower model, tower REITs are seeing amplified benefits increased network spending.
After boosting guidance, AFFO per share growth is now expected to average 10.0% growth in 2019, the highest in the REIT sector. As Crown Castle noted in their earnings call:
“Current tower leasing activity is our highest in more than a decade which we expect will carry into next year. We are seeing a more significant acceleration in tower leasing this year than we previously expected with broad demand from each of our largest customers as they deploy additional cell sites and spectrum in response to the rapid growth in mobile data traffic.”
As it relates to the merger, American Tower provided their first on-the-record reactions to the recent news on this quarter's earnings calls. American Tower was understandably excited about the potential for a fourth potential tenant on its potential acceleration of the 5G rollout. From the American Tower earnings call:
“The agreement really positions the US to accelerate its achievement of global leadership in 5G technology, while at the same time retaining a competitive industry structure that benefits consumers. I believe this will be an excellent environment for American Tower, especially with the increasing focus that you've heard about recently on low and mid-band spectrum for 5G, especially from the Sprint, T-Mobile sides of the equation, not to mention Dish, just last week Verizon, and of course, AT&T has been talking about this already.
Along with robust organic growth, external growth via strategic acquisitions remains a central focus of cell tower REITs, aided by the cost of capital advantage enjoyed by these firms. As we'll discuss shortly, cell tower REITs trade at an estimated 20-30% premium to private market-implied net asset values, meaning that external acquisitions, though somewhat limited, are easily accretive to earnings. The combination of strong organic growth and continued external growth fueled a 16% rise in total property revenues in 2018, rising from the 13% rate achieved in 2017, boosted by the effects of Crown Castle's merger with small-cell operator Lightower. While appearing to be very conservative, these REITs offered guidance that projects a 6% rise in property revenues in 2019.
While the tower business remains as strong as ever, small cell deployment has been slower than anticipated, held back by local regulatory hurdles. As Crown Castle noted in their earnings call:
"The significant increase in the volume of small cells being constructed is straining the response times from municipalities and utilities who are not complying with the FCC orders, resulting in longer construction timelines than we previously experienced.”
Bull & Bear Thesis for Cell Tower REITs
To that point, we continue to believe that macro cell towers provide the most economical mix of network coverage and capacity, and recent challenges with dense small-cell network deployment have affirmed our belief that macro towers will continue to be the "hub" of next-generation networks for the foreseeable future. While communications technology does change very rapidly, it appears that the physical and economic limitations of the alternative technologies (low-orbit satellites, wide-spread small cell networks, and outdoor Wifi) are unlikely to abate anytime soon and the risk of technological obsolescence in the 5G-era is often overstated. While cell carriers have tried to make moves to establish leverage over tower owners by building or acquiring towers themselves, carriers have limited available capital to spend on these initiatives, especially in light of the capital-intensive 5G rollout.
bullish cell tower REITs
The four-year run of strong performance, however, has pushed cell tower REIT valuations to elevated levels compared with the rest of the real estate sector. The land under cell towers, of course, is worth very little without a functioning macro cell site. While we don’t believe there is an immediate risk of technological obsolesce, it is impossible to predict technological innovation in a decade, much less over multiple decades. Further, carriers are incentivized to invest capital in alternative technologies like small-cells and DAS to try to reduce the competitive position of cell towers. Perhaps the most significant risk relates to the fact that these REITs own just 30% of the land under their structures and lease the other 70% through (typically long-term) ground leases.
bearish cell tower REITs
Cell Tower REIT Stock Performance
Trailing only the industrial sector, cell tower REITs have been the stand-outs yet again in 2019, on pace to outperform the REIT index average for the fifth straight year. Surging more than 33% so far this year, only the manufactured housing sector - which is on pace for seven years of consecutive outperformance - has a longer streak of outperformance.
cell tower REIT performance
SBA Communications has led the way so far this year, jumping more than 50%, followed by American Tower at nearly 35% gains. The gains are not shared by all, however. Uniti Group, continuing to deal with the fall-out of the Windstream bankruptcy, has plunged by more than 40% this year.
cell tower REITs
Since NAREIT began tracking the sector in 2012, cell tower REITs have outperformed the REIT index in every year besides 2014. Cell towers continue to be one of the few remaining growth engines of the REIT sector and, considering the positive operating environment forecast for 2018-2020, don't appear to be slowing down anytime soon.
REITs
Valuation of Cell Tower REITs
Strong performance over the past four years has pushed cell tower REIT valuations towards the most expensive end of the real estate sector. Cell towers trade at a sizable Free Cash Flow premium (aka AFFO, FAD, CAD) to the REIT average, but after accounting for the sector-leading expected growth rates, cell tower REITs very quite attractively valued based on the FCF/G metric. As discussed above, cell tower REITs trade at some of the widest NAV premiums in the real estate sector, giving these companies the "cheap" equity capital to fuel further external growth.
cell tower REIT valuations
Cell Tower REIT Dividend Yield
Cell tower REITs are among the lowest-yielding REIT sectors, paying out just 65% of their free cash flow and instead of plowing that capital back into the business to fuel external growth. The sector pays an average 1.9% dividend yield, among the lowest among REITs.
Within the sector, only Crown Castle acts like a typical REIT when it comes to distributions. CCI pays a healthy 3.4% dividend yield, while AMT pays 1.6%.
cell tower REIT dividends
Cell Tower REITs & Interest Rates
Cell tower REITs skew towards the "growth" side of the real estate sector, reacting more to economic growth expectations than to changes in interest rates. Among US REIT sectors, cell towers are the fourth least interest rate sensitive sector and could provide balance to an otherwise rate-sensitive REIT portfolio.
Within the sector, AMT and SBAC are classified as Growth REITs. CCI, which pays a 4% dividend, is a Hybrid REIT and has characteristics that are more aligned with the REIT averages. We classify Uniti as a "speculative growth" REIT and is suitable only for investors willing to take on high risk of principal loss.
Bottom Line: For Cell Tower REITs and 5G, 4 Beats 3
The long-anticipated marriage between T-Mobile and Sprint appears more certain than ever after clearing regulatory hurdles from DOJ and FCC, setting-up a final battle with state attorney generals. An unexpected coup for cell tower REITs, the approval is conditional on the facilitated creation of a fourth competitor. Dish’s viability as a national carrier, however, is an unknown wildcard.
For cell tower REITs, four competitors are better than three, and three beats two. Even if Dish’s ambitious plans fail to materialize, a strong combined T-Mobile avoids a possible duopoly. Dish needs a well-capitalized partner or acquirer to have any real shot at success, something that T-Mobile negotiators have walked a tight-rope with regulators to try to prevent.
Powered by the network densification required by the early roll-out of 5G, cell tower fundamentals remain white-hot. All three cell tower REITs beat AFFO estimates and raised full-year AFFO per share guidance as the early effects of network densification to fuel 5G networks powered above-trend organic growth. We discussed four possible merger scenarios and their impact on the sector, concluding that cell tower REIT investors should be happy with three viable competitors, ecstatic at the potential four, but worried about the possibility of two.
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>>> Why Cell Tower REITs Stand Above the Rest
By Matthew DiLallo
Motley Fool
Dec 29, 2019, Updated on Apr 14, 2020
https://www.fool.com/millionacres/real-estate-investing/articles/why-cell-tower-reits-stand-above-rest/
Cell tower REITs have delivered lots of growth for REIT investors in recent years, and they don’t appear to be slowing down.
Communications tower companies began converting into real estate investment trusts (REITs) in 2011 when American Tower (NYSE: AMT) made the switch. The cell tower company has richly rewarded its investors since that time, generating a 335% total return. That has easily outpaced the S&P 500's 155% total return during that time frame as well as the 119% total return of the Vanguard Real Estate ETF, which is the largest ETF in the REIT sector.
One of the main reasons why cell tower REITs like American Tower have stood above other REIT options is that they've rapidly grown their funds from operations (FFO). That's due in part to the significant rise in mobile data consumption on cellular networks. With that trend expected to accelerate with the deployment of 5G technology, cell tower REITs should be able to continue growing their FFO and dividends at above-average rates over the long-term.
Here's a look at how data has driven the three largest publicly traded infrastructure REITs to new heights -- and why they should continue growing.
American Tower: the name doesn’t even tell half the story
American Tower (AMT) is one of the largest owners of communications towers in the world, with more than 171,000 sites. Most of those (about 130,000) are outside the U.S., making it a global company. That international exposure has enabled American Tower to grow at an accelerated rate over the years for two reasons. First, it has opened new doors to expansion, and second, most international tower sites only have one tenant. Because of that, American Tower has been able to add more telecommunications companies to these existing towers, enabling it to grow its FFO at an impressive 16% compound rate per share over the last decade.
That international focus will also help American Tower continue growing at a fast pace in the coming years even as the industry transitions to a 5G network, which uses lots of small cells instead of large macro cell towers. That's because many of its markets will be slower to adopt this change. Meanwhile, even in developed markets like the U.S., the current 4G infrastructure will remain important to help support data traffic.
American Tower's CEO Jim Taiclet noted this aspect in the company's second-quarter earnings release, stating that "initial 5G deployments are now picking up in the U.S. and we are seeing increasing signs that low and mid-band spectrum on macro towers will serve as a substantial component of next generation networks."
Because of that, their cell towers will likely remain vital to our increasingly data-driven world, which should enable American Tower to continue growing its FFO and dividend -- which currently yields about 1.8% -- at above-average rates in the coming years.
Crown Castle: leading the small cell charge
Crown Castle (NYSE: CCI) became a REIT in January of 2014. It has also stood out since then, generating a total return of more than 140%. That's better than the total returns of the S&P 500 (75%) and Vanguard Real Estate ETF (82%) during that time frame. Driving that growth has been a steady stream of acquisitions, which have helped it build out a leading portfolio of shared communications infrastructure in the U.S.
Like American Tower, Crown Castle owns about 40,000 macro cell towers in the U.S. In addition to that, it operates 75,000 miles of fiber cable that support 70,000 small cells attached to places like streetlights and utility poles, which are crucial to handling the increased speeds of 5G networks. Because of that, Crown Castle has put itself in a position to continue growing its FFO at a healthy pace, which leads it to believe it can increase its dividend (that currently yields 3.4%) by 7% to 8% annually over the long term.
SBA Communications: A little bit of everything
SBA Communications (NASDAQ: SBAC) is the most recent cell tower REIT convert of the trio, making the switch in 2017. Its shares have been red-hot since then, rallying more than 127%. That has easily outpaced the total returns of the S&P 500 (42%) and Vanguard Real Estate ETF (24%) during that period.
In some ways, SBA Communications is a bit of a hybrid between American Tower and Crown Castle. Like American Tower, it operates internationally, with assets in 14 markets in North and South America -- including the U.S. -- as well as South Africa. Meanwhile, like Crown Castle, it owns macro towers as well as other wireless communications infrastructure, including sites in buildings and on rooftops, distributed antenna systems (DAS), and small cells.
SBA Communications' international focus has helped it grow its FFO at an above-average rate, with it expecting this metric to rise 15% on a per-share basis in 2019. Driving that growth is the continued acquisition of new infrastructure (it recently bought 901 more towers in South Africa) and the steady addition of new tenants to its existing locations.
Meanwhile, SBA Communications is getting itself ready for what's next. CEO Jeff Stoops noted on the company's third-quarter conference call that it continues to "take important and meaningful steps to position SBA well for the upcoming 5G world."
It has been testing several things, including using its in-building and DAS infrastructure for 5G. It also recently purchased a data center in Chicago to "test various business models, so that when mobile edge computing becomes a reality, we will be ready to best maximize SBA's opportunities," according to Stoop. That leads him to believe that "there are truly exciting times ahead" for SBA Communications. The company's ability to capture these opportunities could enable SBA to grow its 0.6%-yielding dividend at a high rate in the future.
Great growth stocks for REIT investors
Cell tower REITs offer something not found in most real estate investments: rapid growth potential. Instead of paying high yields, most of these companies reinvest a large portion of their cash flow to build and buy new infrastructure, which has enabled them to grow at much faster rates than other real estate classes. That trend should continue in the future as they work with the telecommunications industry to support the rollout of 5G networks. Because of that, this sector is an ideal one for REIT investors who value growth over current income.
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>>> Here's Why You Should Buy SBA Communications (SBAC) Stock Now
Zacks Equity Research
April 17, 2020
https://finance.yahoo.com/news/heres-why-buy-sba-communications-144102324.html
It seems to be a wise decision to add SBA Communications Corporation SBAC, given its efforts to extend business in select international markets with high growth characteristics. Moreover, amid growing demand for data volume and deployment of 5G network, wireless carriers are expanding and enhancing their networks. These positive trends are expected to drive demand for the company’s communications infrastructure assets.
SBA Communications is expected to witness year-over-year growth in funds from operations (FFO) per share in 2020. The company also beat estimates in the last four reported quarter, the average positive surprise being 2.8%.
Its price performance also seems impressive. In fact, this Zacks Rank #2 (Buy) stock has gained 28.1% in the year-to-date period against the industry’s decline of 13.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, SBA Communications has a number of other aspects that make it a solid investment choice.
Why the Stock is an Attractive Pick
Favorable industry tailwinds: Mobile subscriber growth has significantly boosted the wireless tower industry. Next-generation 4G LTE networks and increased usage of smartphones and tablets are creating impressive demand for the company’s site leasing business. With increasing smartphone adoption, greater broadband demand and plans for 4G service worldwide, the company is set to pursue international wireless infrastructure opportunities. Furthermore, wireless consumer demand is expected to considerably increase in the upcoming years supported by innovation and accelerated adoption of data-driven mobile devices and applications such as machine-to-machine connections, social networking and streaming of video.SBA Communications’ extensive infrastructure portfolio is well-positioned to meet such demands.
Encouraging FFO picture: SBA Communications’ projected FFO growth rate is 10.3% for 2020. This is higher than the industry average of 0.5%. Further, management expects 2020 AFFO per share in the range of $9.07-$9.47.
Strategic Portfolio Expansion: With decent presence in the United Sates and its territories, SBA Communications has developed or acquired thousands of towers throughout Central and South America and across Canada over the years. Presently, the company continues to expand its tower portfolio and seek new growth opportunities. Supported by strong industry fundamentals, the company is identifying international markets with high growth characteristics and extending its business in these regions. In fact, during the December-end quarter, it acquired 1,336 communication sites for a total cash consideration of $471.7 million.
Encouraging Dividend Payout: Solid dividend payouts remain the biggest attraction for REIT investors, and SBA Communications is boosting shareholder wealth through dividend hikes. Specifically, concurrent with its fourth-quarter 2019 earnings release, the company announced a quarterly cash dividend of 46.5 cents on its Class A common stock, indicating a 25.7% hike from its October-December quarter payout. Given the company’s financial position compared with the industry’s, this dividend rate is anticipated to be sustainable.
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>>> 5G Cell Towers: Why You See Them and How They Work
How do 5G small cells work and where are they located?
Lifewire
By Tim Fisher
November 19, 2019
https://www.lifewire.com/5g-cell-towers-4584192
You might have heard of 5G, the newest mobile networking technology that's replacing 4G and powering the next generation of internet-connected devices...but how does it work? You might know that a 5G network uses what’s called small cells, but what does that mean, and does this new technology change the conversation around cell phone radiation?
The cell tower is an essential part of a 5G network. Like any network infrastructure, certain equipment is needed to relay information between devices, which is exactly why a 5G tower is needed for 5G networks.
A 5G tower is different than a 4G tower both physically and functionally: more are needed to cover the same amount of space, they’re much smaller, and they transmit data on an entirely different part of the radio spectrum.
What Are 5G Small Cells?
A small cell in a 5G network is the base station that serves a critical role in the overall network. They're called “small cells” as opposed to "macrocells" used in 4G networks because they’re relatively smaller in size.
Since 5G towers don’t require much power, they can be made relatively small. This is important not only for aesthetics but also for space efficiency—small cells support high frequency millimeter waves, which have limited range (more on why this is important below).
A 5G cell tower is basically just a small box, like you see in the "5G" labeled image above. While this is how most 5G implementations will turn out, some companies are burying antennas under manhole covers to extend their mobile network through the streets.
How 5G Small Cells Work
Despite their size, small cells are not weak. The tech inside these cells is what allows 5G to be so fast and support the growing number of devices requiring internet access.
Inside a small cell is radio equipment necessary for transmitting data to and from connected devices. The antennas within the small cell are highly directional and use what's called beamforming to direct attention to very specific areas around the tower.
These devices can also quickly adjust power usage based on the current load. This means when a radio is not in use, it will drop down into a lower power state in just a few milliseconds, and then re-adjust just as quickly when more power is needed.
5G small cells are fairly simple in design and can be installed in less than a few hours. This is very much unlike the beefier 4G towers that take much longer to install and get up and running.
Of course, small cells also require a power source and backhaul to connect it to the carrier's 5G network, and eventually the internet. A carrier might choose a wired fiber connection or wireless microwave for that connection.
5G Tower Locations
5G promises an extremely interconnected world where everything from smartwatches, vehicles, houses, and farms utilize the ultrafast speeds and low delays it offers. To accomplish this, and to do it well—with as little coverage gaps as possible—it’s required to have a huge number of 5G towers, particularly in areas that demand lots of traffic like big cities and business districts.
Fortunately, since 5G cell towers are so small, they can be positioned in ordinary places like on light poles, the tops of buildings, and even street lights. This translates into less traditional-looking towers but also potentially more eyesores nearly everywhere you look.
For 5G to really shine in a highly-populated city, for example, especially given its short distance limitations, towers need to exist close to wherever connected devices will need access to them, like at intersections, outside the doors of businesses, all around college campuses, right down your street, etc.
Another reason 5G towers have to be installed so frequently in busy areas is that for the small cell to support superfast speeds, it has to have a direct line of sight with the receiving device, like your smartphone or home. If you ever plan to replace your home broadband internet with 5G, you'll most likely have a 5G cell tower down the street from your house.
As 5G rolls out over 2019 and 2020, carriers will begin rolling out 5G coverage maps but probably won't show exactly where every tower is placed.
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>>> Behind the excitement for 5G networks
Insights from Fidelity's portfolio managers
Portfolio managers offer investing insights for the months and years ahead.
by Sonu Kalra
November 6, 2019
https://www.fidelity.com/about-fidelity/overview
"I think 5G technology could boost sales of consumer electronics, transform connectivity in the home, office, and workplace, and mostly live up to all the excitement about its much-faster network speeds," says Sonu Kalra, portfolio manager of Fidelity® Blue Chip Growth Fund (FBGRX).
Kalra says 5G offers as much as a 20-times speed advantage over existing networks, which means consumers can almost instantly download full-length movies on their devices.
"Keep in mind, 5G won't work on existing smartphones, so I think this advancement will help major device makers sell a lot of new product," Kalra notes.
He says the technology also has implications for automobiles and autonomous driving, each of which relies heavily on information being passed between the vehicle and the cloud.
In education, Kalra sees potential for virtual-reality classrooms, and in health care, more remote-monitoring systems and tele-health offerings.
"Over time, I think 5G could enable new experiences that we haven't even dreamed of yet," Kalra says.
According to Kalra, telecom heavyweights Verizon Communications (VZ) and AT&T (T) are just starting to deploy 5G networks, and each plans major build-outs through 2020.
As of September 30, the fund was not invested in either firm, with Kalra instead focused on companies supplying the telecom providers, such as Marvell Technology (MRVL), which makes chips that power 5G infrastructure, and Qualcomm (QCOM), a maker of chips to enable 5G phones.
Learn more about this manager and his fund
Sonu Kalra is portfolio manager of Fidelity® Blue Chip Growth Fund, which held securities mentioned in this article on September 30, 2019. As of this date, Marvell Technology composed 2.47% of fund assets and Qualcomm composed 1.47% of fund assets.
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>>> WILL CELL TOWERS BECOME OBSOLETE WITH 5G?
By The Whiz Cells
April 2, 2019
https://www.thewhizcells.com/will-cell-towers-become-obsolete-with-5g/
If you’re excited to experience 5G service, you’re not alone. Carriers like Verizon and AT&T have been quick to hype up the benefits of the next generation of wireless service. Indeed, consumers can expect the average 5G download speed to equal approximately 10 times the speed of 4G.
Considering the significant speed and coverage boost 5G could provide, it makes sense that companies would rush to implement this next-generation infrastructure. But since people often compare the new network’s structure to Wi-Fi, what will 5G infrastructure actually look like?
You can find answers to this and other common questions about the future of 5G right here.
How Does 5G Work?
As you might know, cell phones use radio frequency signals to communicate with cell towers. Current 4G networks use relatively low radio frequencies compared to 5G networks, which take advantage of the extremely high frequencies opened up by the Federal Communications Commission (FCC) for civilian use in 2016.
The high frequencies provide many improvements over 4G. They allow faster connections, support more devices without bandwidth problems, and have the ability to operate nearby other signals without as much interference.
For us, 5G means faster speeds and the ability to connect more devices than 4G currently accommodates. As a result, many people predict 5G will accelerate the development of more interconnected devices, such as smart home appliances, security systems and even self-driving cars.
Unfortunately, 5G still has some downsides. In particular, the high radio frequencies 5G uses aren’t able to travel as far as current 4G wavelengths. Furthermore, they struggle to move through objects. This means 5G will require an enormous expansion of current cell tower infrastructure in order to function.
How Will 5G Use New Cell Towers?
In order to provide 5G service on a large scale, carriers will need to add at least 250,000 new small cell sites nationwide. However, though these small cell technologies perform similar functions, they’re not your typical cell tower.
While most current cell towers are large, freestanding behemoths, the cell towers of the future are smaller devices which companies aim to mount onto lampposts, rooftops, traffic lights and other appropriate spots around cities and towns.
Because 5G uses shorter radio wavelengths, the towers needed to pick them up can be smaller than their predecessors. This makes them easier to place in great numbers. However, these new cell towers are also causing conflict between telecom companies and local governments and municipalities, since they need to be installed on a large amount public property.
The location and appearance of new 5G cell sites in your area will likely depend on your local government’s negotiations with service providers — unless, of course, you live in one of the 13 states which have passed legislation restricting local oversight of 5G infrastructure.
Will Traditional Cell Towers Be Replaced?
The answer to this question, at least for now, remains “no.” It seems most traditional cell phone towers will remain active for the foreseeable future.
Some carriers will upgrade existing cell towers for use with 5G signals, effectively integrating current infrastructure into the new system. These existing towers could especially help transmit signals through rural locations where very few objects stand in the way.
However, it’s important to note that existing cell towers may also continue transmitting 4G signals to areas without 5G service. Though companies expect 5G to increase coverage overall, 5G won’t launch everywhere immediately.
Urban areas, like the cities companies are currently using as test sites for the technology, will likely benefit from 5G before more rural areas. Some communities with very low populations may not see 5G service for some time due to the high cost of setting up several smaller 5G “towers” to serve a low population area. Because of this, existing cell towers and other communication infrastructure will remain essential for keeping people connected to the rest of the world.
Eventually, it’s possible that cell phone towers will become obsolete. After all, some companies are already developing direct device-to-device mobile connections, which could eliminate the need for bulky cell phone towers altogether. Whatever the future holds, the transition will occur slowly.
What Does 5G Have in Store for the Future?
The widespread switch to 5G wireless connection could alter many aspects of the digital and physical landscape. As cell towers become smaller and more omnipresent, we’ll likely also see the development of increasingly sophisticated mobile phones and phone apps that take advantage of faster download speeds and stronger broadband connections.
As for what comes beyond 5G? For now, we’ll just have to wait and see.
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>>> AT&T Hits Highest Level Since 2018 After Elliott Urges Shake-Up
By Scott Deveau
September 9, 2019
https://www.bloomberg.com/news/articles/2019-09-09/elliott-takes-3-2-billion-stake-in-at-t-seeks-asset-sales?srnd=premium
Hedge fund criticizes DirecTV, Time Warner, T-Mobile deals
Stock could gain more than 50% with changes, Elliott says
AT&T Is on the Forefront of 5G Technology, Tech Mahindra CEO Says
Unmute
Elliott Management takes a $3.2 billion stake in AT&T.
AT&T Inc.’s sweeping transformation from Ma Bell to a multimedia titan has gone both too far and not far enough for Elliott Management Corp.
Billionaire Paul Singer’s New York hedge fund disclosed a new $3.2 billion position in AT&T, taking on one of the nation’s biggest and most widely held companies with a plan to boost its share price by more than 50% through asset sales and cost cutting.
Elliott outlined a four-part plan for the company in a letter to its board Monday. The proposal calls for the company to explore divesting assets, including satellite-TV provider DirecTV, the Mexican wireless operations, pieces of the landline business, and others. It urges AT&T, led by Chief Executive Officer Randall Stephenson, to exit businesses that don’t fit its strategy, run a more efficient operation and stop making major acquisitions. Elliott said it would also recommend candidates to add to AT&T’s board.
In response, AT&T said it would review Elliott’s recommendations and said many of them are “ones we are already executing today.”
The telecom giant said its strategy is “driven by the unique portfolio of valuable businesses we’ve assembled across communications networks and media and entertainment, and as Elliott points out, is the foundation for significant value creation. We believe growing and investing in these businesses is the best path forward for our company and our shareholders.”
AT&T shares surged as much as 5.2% to $38.14 in New York trading Monday, reaching their highest level since February 2018.
Elliott said the investment -- among its largest to date -- was made because the company is deeply undervalued after a period of “prolonged and substantial underperformance.” It argued this has been marked by its shares lagging the broader S&P 500 over the past decade. It pointed to a series of strategic setbacks, including $200 billion in acquisitions, the “most damaging” of which was its $39 billion attempted purchase of T-Mobile US Inc. That deal resulted in the largest breakup fee of all time when the government blocked it in 2011 -- about $6 billion in cash and assets.
“In addition to the internal and external distractions it caused itself, AT&T’s failed takeover capitalized a viable competitor for years to come,” Elliott said.
Elliott's pressure for changes boosts AT&T shares
The hedge fund also criticized the subsequent acquisitions of DirecTV and media giant Time Warner Inc.
While the position in AT&T is large, Elliott may have a difficult time pushing for change unless it gets other investors to back its stance. Its newly disclosed stake in AT&T represents just about 1.2% of the company’s total market value.
Elliott’s plan also calls for aggressive cost-cutting measures that aim to improve AT&T’s margins by 3 percentage points by 2022. Those margins have come under pressure amid cord-cutting in video and widespread discounting in wireless, and Elliott said competitors like Verizon Communications Inc. have done a better job addressing those headwinds.
Elliott said in the letter it has identified opportunities for savings in excess of $10 billion, but the plan would only require cost cuts of $5 billion.
Elliott is also calling for a series of governance changes, including separating the roles of CEO and chairman -- currently held by Stephenson -- and the formation of a strategic review committee to identify the opportunities at hand.
Transformative Deals
With a series of deals over the past several years, AT&T has transformed itself from a traditional telecom company into a multimedia behemoth. The company bought satellite-TV provider DirecTV for $67 billion in 2015, leaping into first place among U.S. pay-TV companies. Elliott criticized that deal in its letter as having come “at the absolute peak of the linear TV market.”
AT&T then moved firmly into entertainment and media with the $85 billion acquisition of Time Warner in 2018. That deal brought marquee assets such as HBO, CNN and Warner Bros.
“Despite nearly 600 days passing between signing and closing (and more than a year passing since), AT&T has yet to articulate a clear strategic rationale for why AT&T needs to own Time Warner,” said Jesse Cohn, a partner at Elliott, and Marc Steinberg, an associate portfolio manager, in the letter. “While it is too soon to tell whether AT&T can create value with Time Warner, we remain cautious on the benefits of this combination.”
High Debt
AT&T is the most indebted company in the world -- not counting financial firms and government-backed entities -- with $194 billion in total debt as of June, a legacy of Stephenson’s steady clip of large acquisitions. The CEO used to keep a spreadsheet of a few dozen companies that he studies on his tablet to plan his next big deal, people familiar with the matter told Bloomberg in 2016.
The stock is among the top 20 most widely held U.S.-traded companies among institutional investors, according to data compiled by Bloomberg. That’s partially because of its steady dividend, which totaled $2.04 a share last year, giving investors a reliable payout in good times and bad.
What Bloomberg Intelligence Says
“AT&T will likely be under greater pressure to streamline operations and wring better performance out of Time Warner following the involvement of activist investor Elliott Management, yet this probably won’t prompt a change in company strategy. ... Elliott’s recommendation to spin off the DirecTV satellite business isn’t practical, in our view, as AT&T likely needs its free cash to help fund its dividend.”
-- John Butler, senior telecom analyst, and Boyoung Kim, associate analyst.
Phone companies have also traditionally been considered a safety net for investors in bad economic times because people still need to communicate, though AT&T’s exposure to the landline business has more recently been a drag on profits because more people are shutting off their home phones and going wireless-only.
President Donald Trump, whose Justice Department unsuccessfully opposed AT&T’s Time Warner acquisition and who has criticized CNN’s coverage of him, tweeted Monday, “Great news that an activist investor is now involved with AT&T.”
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Shaw Communications (SJR) - >>> 3 Monthly Dividend Stocks to Buy Today
by Aaron Levitt
InvestorPlace
June 21, 2019
https://finance.yahoo.com/news/3-monthly-dividend-stocks-buy-185123145.html
Retirement: It’s all about one thing and that’s income … replacing a steady paycheck with your savings. With that, dividend stocks have plenty of appeal for retirees. Not only can you score higher yields than bonds, but you have the ability to grow those payouts over time as well. However, dividend stocks do have one major drawback.
Their payment schedules.
Most dividend stocks pay on a quarterly or even semi-annual basis. And while that may not seem like a problem, for many retirees used to a monthly or bi-weekly paycheck balancing cash flows can be a hard pill to swallow. After all, your mortgage, cable bill and car payments are due each month. To that end, getting a monthly dividend could be the answer to budgeting issues.
Luckily, there are plenty of dividend stocks that do happen to payout monthly. Here are three of the best.
Main Street Capital Corp (MAIN)
Dividend Yield: 5.89%
Most investors have never heard of businesses development companies (BDCs). That’s a shame because they can be some of the biggest yielding stocks around. BDCs are set up as pass-through entities much like real estate investment trusts, and similarly must pay out at least 90% of their earnings as dividends. How they earn that income is by loaning cash to mid-sized firms — companies too big to ask the local bank for a loan, but not big enough to launch a significant bond offering — at competitive rates. The best way to really think of them is like public-private equity firms.
And when it comes to BDCs, Main Street Capital (NASDAQ:MAIN) could be one of the best.
MAIN has provided capital to more than 200 private companies and thanks to its underwriting and deal standards, it has been very successful at turning a big profit on those loans. Just for the first quarter of this year, MAIN has already seen its investment income rise by 10% year-over-year. Those sorts of gains have allowed the firm to become a great dividend stock since its IPO in 2007. The BDC has managed to grow its payout by 127% since then.
Today, you can score a great recurring monthly dividend with a current yield of 5.89%. The best part is that MAIN’s management likes to reward shareholders further with extra supplemental dividends. This allows the BDC to use excess capital if a great deal can be had or for dividends. Adding those extra payouts in, and investors are looking at closer to 7.2% yield.
BDCs like MAIN provide a much-needed service to many firms. And thanks to its underwriting skill and focus on quality firms, MAIN has quickly become one heck of a dividend stock.
Shaw Communications (SJR)
Dividend Yield: 4.5%
One sector that can be a fertile hunting ground for dividend stocks, and is also known for its stability, is the telecommunications industry. Top stocks like AT&T (NYSE:T) and Verizon (NYSE:VZ) are in plenty of income portfolios. The reason is easy to see. Predictable fixed costs and demand allow telcos to pay out reliably healthy dividends. The problem is T and VZ aren’t monthly dividend stocks.
But Canada’s Shaw Communications (NYSE:SJR) is.
Shaw remains one of Canada’s largest telecoms and offers the usual bundle of services, including cable, internet and wireless phone services. It has been doing this for decades just like T and VZ here at home. And SJR has also tackled the problem of cord cutting head on. The telecom has been able to successfully convert customers to faster internet service to overcome lower cable subscriptions. This has helped boost revenues. At the same time, SJR has been one of the first movers in Canada for new 5G networks. That will give it a heads-up in bringing faster mobile internet, IoT and other applications to the nation.
As Shaw moves forward in these areas, investors can sit back and collect a hefty monthly yield. Currently, SJR pays 4.5%. Now, that dividend will fluctuate based on changes to the U.S./Canadian dollar. However, given Shaw’s stability and potential growth, it’s a small price to pay for a great dividend stock.
LTC Properties (LTC)
Dividend Yield: 4.89%
Honing in on so-called mega-trends is a great way to find dividend stocks that will stand the test of time. For monthly-dividend payer LTC Properties (NYSE:LTC) that mega-trend is the “Graying of America.”
Thanks to advances in medicine, lifespans are only increasing and longevity is almost assured at this point. LTC is uniquely positioned to take advantage of this fact. The firm invests in the senior housing and assisted living facility sectors of the healthcare property market. Currently, the firm owns/invests in roughly 200 properties that are right in the sweet spot for the nation’s aging baby boomers. Demand for these facilities continues to grow as more seniors need aid to get along.
The key is that LTC doesn’t operate the facilities or even own the buildings in many cases. What it does is provide financing for owner/operators to construct and renovate their properties or it buys properties from owners in a sale-leaseback transaction. It’s basically a mortgage lender that collects a monthly rent check. This position in the sector allows it to avoid some of the profitability issues that can result in senior living and assisted living facilities.
It also allows for some safety and steady profits on its end. Year-over-year, LTC saw a gain in FFO for the first quarter of 2019. Steady FFO gains have allowed it to raise its dividend over 46% since 2008. Currently, LTC yields 4.89%.
All in all, LTC is in the right area at the right time. And that makes it a great monthly dividend stock to own.
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>>> InterDigital, Inc. designs and develops technologies that enable and enhance wireless communications in the United States and internationally. It provides technology solutions for use in digital cellular and wireless products and networks, including 2G, 3G, 4G and IEEE 802-related products and networks. The company develops cellular technologies, such as technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 3G, and 4G wireless networks, as well as mobile terminal devices; and 3GPP technology portfolio in 5G NR, LTE-Advanced, and cellular Internet of Things (IoT) areas, as well as technologies for automobiles, wearables, smart homes, drones, and other connected consumer electronic products. It also provides video encoding and transmission technologies; technologies to enable interconnection for various access types comprising cellular, WLAN, and LPWA, as well as IoT service frameworks; interoperability and scalability solutions through oneMPOWER platform; and oneTRANSPORT data marketplace that offers common interface to vraious service providers allowing public authorities to control and monetize, and companies to access IoT data in real-time. In addition, the company engages in the development of technologies in the areas of security and analytics, sensor technologies, and other areas. Its patented technologies are used in various products that include cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment, which comprise base stations; components, dongles, and modules for wireless devices; and IoT devices and software platforms. As of December 31, 2018, the company had a portfolio of approximately 34,000 patents and patent applications related fundamental technologies that enable wireless communications, video encoding, display technology, and other areas. InterDigital, Inc. was founded in 1972 and is headquartered in Wilmington, Delaware.
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>>> AT&T wants to be big in entertainment, but first it has a $49 billion problem to fix
Wall St Journal
by Drew FitzGerald
1-29-19
https://www.msn.com/en-us/money/companies/atandt-wants-to-be-big-in-entertainment-but-first-it-has-a-dollar49-billion-problem-to-fix/ar-BBSTUYm?li=BBnb7Kz&ocid=mailsignout#page=2
When AT&T Inc. took over DirecTV in 2015, a group of executives from the two companies gathered at Fleming’s steakhouse in El Segundo, Calif., to celebrate the deal. Toward the end of the dinner, DirecTV chief Mike White stood up, drew a lightsaber and handed it to an executive of AT&T, saying it might help in future negotiations with channel owners.
Today the telecom company, nicknamed the Death Star by detractors, isn’t scaring so many. Acquiring satellite-TV provider DirecTV, which cost $49 billion, was supposed to catalyze AT&T’s transformation into a media and entertainment giant. Instead, it has become one of the biggest casualties of the rise of Netflix Inc. and other streaming-video services.
DirecTV has lost 1.4 million satellite customers since its peak of 21 million-plus about two years ago. Analysts expect news of roughly 300,000 more defections when AT&T reports quarterly results on Wednesday. AT&T is bracing for cancellations this year that would cut into its 2019 operating profits by $1 billion.
The company has told investors it plans to make up for much of the money lost to defections by charging more to customers with discounts who stay. Meanwhile, some former call-center workers say AT&T has incentivized such employees to make it as difficult as possible for customers to cancel, a claim the company disputes.
AT&T is facing the perils of trying to move beyond its telecom roots into a media industry where the balance of power is dramatically shifting. DirecTV in the span of a few years has evolved from a springboard for its parent company’s show-business ambitions into a drag on its business and public image. The shift has weakened AT&T’s hold on once-reliable channel-surfers as it seeks to capitalize on an even bigger purchase of an entertainment heavyweight, its $81 billion acquisition of Time Warner Inc.
The forces hampering DirecTV are pressuring many other television companies, too, as more people drop traditional subscriptions in favor of streaming internet services. Cable-TV providers, however, also sell broadband connections, which the cord-cutters need. Satellite services such as DirecTV have less room to maneuver.
AT&T solidified its push into media and entertainment last year with its purchase of Time Warner, the owner of HBO, Warner Bros., CNN and other cable channels. The deal swelled AT&T’s debt load, leaving it with about $170 billion of net debt late last year, the highest of any nonfinancial public U.S. company.
Investor concerns about the debt have helped drive down AT&T’s market capitalization to around $225 billion, which is roughly even with Verizon Communications Inc.’s even though AT&T has about $50 billion more annual revenue.
“Investors are pretty skeptical, especially that they can turn around the video business,” said Allyn Arden, a credit analyst at S&P Global Ratings.
AT&T Chief Executive Randall Stephenson said the company’s many parts are working in concert: The video business built atop DirecTV has helped support investments in the parent company’s residential fiber-optic broadband service, its new streaming video technology and a relatively young advertising business, among other growing units.
“It’s pretty much playing out as we expected,” Mr. Stephenson said in an interview. “The board doesn’t sit around saying, ‘Wow, this thing, the wheels came off versus what was expected.’ We’re not too far off. . . . This is a year when we get everything rationalized.”
The CEO said the combination of AT&T with DirecTV, which AT&T executives knew was a mature and declining business, has brought promised savings and is generating more than $4 billion in annual cash flow.
Satellite subscriber losses have accelerated in the past year, he acknowledged, and price pressure from streaming services has been greater than expected at the time of the deal. He said AT&T expects investments in growing businesses to yield results this year.
“So 2019 candidly is the money year,” he said.
AT&T’s U.S. cellphone business, which provides $70 billion of the company’s more than $170 billion in annual revenue, is relatively stable, fueling nearly half of earnings last year. The movie studios and TV channels AT&T acquired last year in the Time Warner deal also are helping the bottom line.
AT&T’s push into satellite broadcasting started several years ago in its deal-making unit, a sprawling group taking up half a floor of AT&T’s Dallas headquarters. John Stankey, who led the group, had become increasingly focused on how much time cellphone customers spent watching video on their phones, and began pushing for AT&T to acquire assets involved with entertainment.
A handful of TV-channel owners controlled the best original programming and they were charging cable and satellite companies more each year to carry it. The biggest pay-TV providers had the leverage to pay the lowest fees for those channels, something AT&T could see at its small U-verse unit, which provides TV and broadband over fiber-optic lines in 22 states. U-verse had to pay about $20 more per video subscriber than DirecTV did for programming, said a person familiar with the pricing.
Executives regarded DirecTV, which controlled a fifth of the U.S. pay-TV market, as a springboard for a potential AT&T plunge into the entertainment distribution business.
They also considered building a platform from scratch, but that would be a costly endeavor. “Our shareholders expect a dividend,” Mr. Stephenson noted. “They expect return of capital. Netflix is in a very different place, as is Amazon. . . .” Neither pays a dividend. AT&T stock has a 6.7% payout.
In a filing to the Federal Communications Commission in 2014, the year AT&T made the deal for DirecTV, AT&T said a large share of 18- to 29-year-olds had already dropped pay-TV service or avoided buying it altogether. “We expect consumers in other age groups to follow suit in the coming years,” the company wrote in the filing laying out the rationale for the deal.
AT&T executives believed they could mitigate the threats to the traditional TV business with cost-saving benefits.
First, AT&T had nearly six million U-verse customers in Texas, California and elsewhere who could instead watch DirecTV, which didn’t have to pay so much for programming.
Second, controlling DirecTV would allow the sales staff to offer cellphone customers a bundle of wireless and satellite-TV service at discounted rates. AT&T also had the resources to invest in the kinds of online-only video services that were siphoning off customers, and DirecTV would throw off more cash to do so.
Though AT&T was well aware of cord-cutting, “the decline of the traditional pay-TV bundle started faster than we assumed,” Mr. Stankey testified last year in an antitrust case in which the Department of Justice tried to block the Time Warner acquisition. AT&T won the suit and closed the deal, though the DOJ has appealed.
On top of the accelerated customer losses, AT&T discovered that packaging cellphone and satellite service didn’t make much sense. Strategy leader Mr. Stankey, who ended up running DirecTV for two years after its acquisition, later said the combination was an “unnatural bundle” that didn’t appeal to most people.
“The problem is, when a customer is thinking about buying pay TV, it doesn’t necessarily align for when they’re thinking about buying a cellphone or changing their cellphone carrier,” Mr. Stankey testified in the antitrust case. “They tend to buy pay-TV services when they move. You have your cellphone all the time.”
Mr. Stephenson, in the interview, said DirecTV’s defections have been on a par with those at cable-TV rivals. “Where we are losing subscribers is where we don’t have a broadband play with it,” he said. “Where we pair an over-the-top product with a wireless product, it does quite well.”
AT&T’s streaming option, called DirecTV Now, has acquired nearly two million subscribers since it launched in late 2016. The total includes customers who signed up for free trials and some cellphone subscribers who added low-cost channel packages.
AT&T hasn’t been able to steer enough of the customers who ditched DirecTV’s satellite service to DirecTV Now because the streaming service must compete with a growing field of online channel bundles from YouTube, Hulu and Sony Corp.’s PlayStation.
AT&T was particularly wounded by YouTube TV, an online package of live channels that cost $35 a month when it launched in 2017. The service, run by Google owner Alphabet Inc., has more than a million users, according to investment bank UBS. AT&T executives think Google is subsidizing the unprofitable service. A YouTube spokeswoman declined to comment about the company’s profitability.
Armed with entertainment assets from Time Warner, AT&T is rolling out more streaming-video products to answer Google, Netflix, Hulu and Amazon. Besides DirecTV Now, AT&T has launched a slimmer bundle of channels called WatchTV. In October it disclosed plans to offer an HBO-centered video service with a selection of movies and TV series acquired in the Time Warner deal.
Such online packages are often unprofitable, at least at first. They will need time to build big enough audiences to offset the loss of traditional customers who shell out more than $100 a month, on average, for channel packages via satellite. AT&T’s new offerings enter a market that will soon include streaming services planned by Walt Disney Co. and Comcast Corp.
In the meantime, the hard work falls on the customer-service agents with the job of plugging the leaks at DirecTV. They are under growing pressure to keep customers from canceling, said former employees. The the pay of call-center workers is so closely tied to their ability to hold onto subscribers that former employees said they sometimes crossed ethical lines to meet the goals.
"There’s no way that we could make the numbers we were told to make,” said Altrina Grant, former manager of a Chicago-area AT&T call center. She said some agents would promise to call back a customer about a request to drop service rather than immediately disconnecting, which would count against their compensation. Irate customers would later call another employee to ask why their request wasn’t honored, she said.
"These reps were getting thousands of dollars because they knew how to manipulate the system,” Ms. Grant said.
Cyrus Evans, a former call-center manager in Waco, Texas, said employees’ pay could swing between $50,000 and $80,000 a year depending on their performance, which was often influenced by how many disconnection requests they could deflect. Mr. Evans said employees often got angry calls from customers who had been promised their service would end, only to receive a bill the next month. He said the incentive structure rewarded bad behavior.
Former AT&T workers said the company launched a new audit team in 2017 to crack down on support staffers making promises they couldn’t keep. Ms. Grant said this initiative led the company to fire some workers but several customer-care executives are still in their jobs.
The company said its incentives reward employees based on customer satisfaction, not sales or disconnections. “We have a dedicated team that monitors customer interactions and I can tell you that reps failing to disconnect a customer for any reason is extremely rare,” AT&T said. “Our expectation is that customers receive a great experience. Our employees are held to the highest ethical standards and we consider anything short of that to be a serious violation of our company Code of Business Conduct.”
This year, about two million two-year DirecTV contracts are expiring, an opportunity AT&T plans to use to roll back discounts. “As those customers come due, we’ll get closer to market pricing,” said John Donovan, chief of the telecom business, at a November investor conference. “We’ll be respectful of our customers, but that will move up.”
DirecTV has had an edge over rival satellite and cable companies with NFL Sunday Ticket, an add-on subscription providing games that aren’t shown locally. The service features prominently in marketing.
The league has weakened DirecTV’s hold on fans, however, by offering other ways to access some of the content. And the agreement is on shaky footing because the NFL has the option to open up Sunday Ticket to bidding early this year. AT&T executives have discussed the matter with NFL Commissioner Roger Goodell. The league hasn’t signaled what it will do.
AT&T customer Ben Harding is sticking with the company despite disappointing call-center interactions. The Los Angeles screenwriter said a representative of AT&T’s loyalty department offered him monthly discounts adding up to $500 a year if he kept his TV service, a deal he accepted.
Weeks later, Mr. Harding said, some promised channels weren’t available, and it took several calls to AT&T’s corporate office and a Facebook message to a high-level executive to persuade the company to give him a credit.
"The whole thing left me suspicious,” he said, “and with a bad taste in my mouth.”
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American Tower - >>> 7 Best Stocks to Buy as You Recalibrate Your Compass
by Josh Enomoto
InvestorPlace
November 2, 2018
https://finance.yahoo.com/news/7-best-stocks-buy-recalibrate-164509126.html
Throughout mankind’s history, and even to this day, Polaris, or the north star provides a crucial frame of reference. Polaris is situated directly atop the earth’s axis, staying put while other stars dance around it. Similarly, companies levered toward secular and stable businesses represent the best stocks to buy during market downturns.
While the vast majority of publicly traded securities have absorbed substantial pain last month, they all share a common negative catalyst: fear of the unknown. For most organizations, that fear is China and the real possibility of a protracted trade war. In other cases, it’s the upcoming midterm elections and the questions they will raise.
But the best stocks to buy at this present time have gone against the grain. Whether they’re holding onto their market value, or have experienced profitability, some organizations haven’t let distractions derail them.
Typically, this is because their industry demand isn’t vulnerable to geopolitical whims. A customer might skimp on a flat-screen TV, but they can’t say the same about their medication. Or, a company’s products are aligned with future business trends that extracurricular distractions simply don’t matter.
Admittedly, it’s difficult to concentrate on your portfolio during a bearish phase. But “north star” investments do exist, and they’re more plentiful than you might think. Here are seven of the best stocks to buy in these troubled waters:
Walgreens Boots Alliance (WBA)
One of the best stocks to buy amid a market crash is a company that’s levered toward an indispensable industry. A prime example is Walgreens Boots Alliance (NASDAQ:WBA). As a retail pharmaceutical company with both domestic and international exposure, WBA stock offers fundamental protection against cyclical volatility.
Sometimes, though, theory and reality don’t often align. Fortunately for WBA stock, this is a case where the fundamentals are well represented in the markets. Indeed, shares of Walgreens Boots Alliance have greatly exceeded benchmark indices. For October, WBA gained 9.5%, while during the second half of the year, shares are up nearly 35%.
While the company has already enjoyed outstanding performances, WBA stock still has more upside potential. Its most recent earnings report for the fourth quarter impressed the markets, producing strong earnings and sales growth. Plus, consumers are unlikely to skimp out on the company’s essential products, irrespective of economic conditions.
CME Group (CME)
At first glance, CME Group (NASDAQ:CME) doesn’t immediately strike you as one of the best stocks to buy right now. Anything to do with the broader markets and investment services seems like an opportunity to deleverage. However, a quick look at CME stock suggests otherwise.
CME Group has simply proven to be one of the best stocks during this market fallout. In October, while the Dow Jones Industrial Average crumbled, CME stock gained nearly 7%. Going back to the July open, shares have jumped almost 13%.
I’m sure most investors are still hesitant on buying into CME stock. We’ve heard time and again that millennials are not investing in the stock market. If that’s the case, why risk exposure to a company that operates futures and options exchanges?
For one thing, these “exotic” instruments represent a necessary component of the broader markets. Second, CME Group has demonstrated surprising flexibility for such a staid organization. This is perfectly demonstrated with the company’s foray into bitcoin.
I’ve heard that bitcoin has some popularity among millennials, which is why you should give CME stock a second look.
Coca-Cola (KO)
I’m not saying anything new when I say that Coca-Cola (NYSE:KO) has frustrated long-term shareholders. While no one expects KO stock to be a superior growth engine, investors do like to see returns. Unfortunately, Coca-Cola shares, at their current price, haven’t moved much for two-and-a-half years.
That might change in the current environment. For the month of October, KO stock almost hit 4%. No, that’s not going to transform the iconic beverage-maker into a high-powered tech company. But have you seen tech firms lately? By not dying, KO puts itself among the best stocks to buy.
Better yet, the positive sentiment surrounding the company isn’t based on whimsical emotions. Earlier this summer, Coca-Cola pulled off a surprising Q2 earnings beat. It followed that up with another comprehensive top-and-bottom beat in Q3. That promptly pushed KO stock higher.
I still see reasons for believing in Coca-Cola. First, the company specializes in selling cheap, and increasingly relevant consumer staples. Second, KO stock features a fairly generous 3.3% dividend yield, a huge bonus at this juncture.
American Tower (AMT)
Another name that some investors may find surprising is American Tower (NYSE:AMT). In recent weeks, shares of smartphone-component manufacturers have suffered tremendously volatility. But for AMT stock — where the underlying company specializes in cell phone towers — it has experienced the opposite effect.
During the October selloff when most publicly traded firms were suffering catastrophic losses, AMT ended the month up nearly 7%. That stat is more impressive when you consider that shares dropped more than 3% on Halloween. For the year-to-date, American Tower has gained 9%.
Although AMT stock lacks the pizzazz that typically belongs on a list of best stocks, its underlying industry is indispensable. As we move further into the world of 5G wireless networks, American Tower’s enviable real-estate portfolio levers significant value.
And while it’s true that AMT’s cell towers are suited for 4G, 5G cells must still communicate with larger towers. Further, American Tower has a strong international presence, and not all countries will adopt 5G simultaneously.
Starbucks (SBUX)
For whatever reason, several notable firms have suffered a backlash from racially motivated incidents. The most recent example is Papa John’s (NASDAQ:PZZA) notorious incident involving founder John Schnatter.
Although not quite as controversial, Starbucks (NASDAQ:SBUX) generated negative headlines for racially discriminating against specific customers.
That aside, both Papa John’s and SBUX stock have something interesting in common: they have climbed back from their post-discrimination woes.
Since hitting bottom near June end, SBUX stock has skyrocketed nearly 22%. Last month, Starbucks was one of the few investments that didn’t roll over, gaining a little over 2%. Frankly, I find this shocking considering how divisive our political rhetoric has become.
Nevertheless, it’s clear that the American people are more forgiving than I thought. That puts SBUX stock in a good position during these uncertain times. The company delivered an overall strong earnings report, albeit with some weaknesses in foot traffic.
But the bottom line for me is that nothing — not even racial controversy — can take down the Starbucks brand. This is an awkward but still viable reason to consider SBUX stock.
Disney (DIS)
With all that’s happened over the past few weeks, and with a heavily contested midterm elections coming up, I’ve completely forgotten about Disney (NYSE:DIS). Yet perhaps that’s for a good reason. Sometimes, flying under the radar is the key to success.
While I wouldn’t call DIS stock a superb October investment, it was one of the few Dow 30 companies to keep the bears at bay. Yes, Disney shares lost 2% last month, but I consider that a victory against the bigger picture. The underlying index dropped almost 6% during the same timeframe.
But with DIS stock, I’m not so much interested in analyzing stats than I am assessing its potential. Indeed, I think Disney is ideally positioned, and even more so if broader bearishness continues.
As I explained my thoughts on AMC Entertainment (NYSE:AMC) in another article, people seek escapism during troubled times. AMC benefits because it presents value-packed entertainment. In a similar fashion, Disney offers that same escapism but through multiple avenues. Thanks to its vast entertainment empire, I see DIS stock moving higher from here.
TJ Companies (TJX)
A quick look at Amazon’s (NASDAQ:AMZN) price chart reveals that the retail markets haven’t found a complete respite. Nevertheless, TJX Companies (NYSE:TJX) could end up being one of the best stocks to come out of this sector.
For one thing, TJX stock has avoided the severe volatility impacting so many other competitors. For October, shares have dropped a little bit less than 3%, which is really nothing. The benchmark exchange-traded fund SPDR S&P Retail ETF (NYSEARCA:XRT) has fallen 6.5% during the same timeline.
Another factor that boosts TJX stock is the underlying company’s business. TJX specializes in off-season, discounted fashion and home goods. During an economic upheaval, everyday low pricing drives foot traffic into stores. Even during an economic upswing, very few people are going to turn down a good deal.
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>>> AT&T’s Huge Debt Load Isn’t Sinking Shareholders—Yet
By Alexandra Scaggs
Barrons
Aug. 22, 2018
https://www.barrons.com/articles/at-ts-huge-debt-load-isnt-sinking-shareholdersyet-1534963585?mod=yahoobarrons&ru=yahoo&yptr=yahoo
Wells Fargo thinks AT&T (T) is serious about reducing its debt—and that its shareholders could pay the price.
Analyst Jennifer Fritzsche downgraded AT&T’s shares to Market Perform from Outperform on Wednesday, in part because its status as the most-indebted nonfinancial U.S. company could force it to play nice with bondholders at shareholders’ expense.
She also expressed concern about the profitability of its entertainment group, which includes DirecTV, and a slowdown in growth in the part of its business that provides companies with advanced communications services. Shares were down 1.4% at $32.93 at 1:08 p.m..
AT&T certainly has a lot of debt to pay off—more than $180 billion, some $82 billion of which is a result of its acquisition of Time Warner. That means it needs to pay down or refinance $9 billion to $12 billion every year from 2019 to 2024.
Fritzsche and Wells Fargo’s credit analysts believe that means the company must deliver on its previously stated goal to cut leverage to 2.5 times earnings before interest, taxes, depreciation, and amortization (Ebitda) by the end of 2019. Wells Fargo estimates that will require about $30 billion of debt reduction.
“The pendulum has currently shifted in favor of bond holders given the fact one of AT&T leading priorities for cash is debt reduction,” the analysts wrote. “We believe AT&T has to meet its aggressive delevering goal in order to remain in the good graces of bond holders and to preserve future access to debt capital.”
The risk, in Fritzsche’s view, is that the company could give cash to bondholders when it should be investing in programming, capital improvements, and the race to 5G.
We have our doubts about that. Netflix’s (NFLX) second quarter shows that higher spending does not always lead to better results. The platform spends five times more on programming than HBO does, but as of the end of 2017, HBO had 142 million subscribers, while Netflix had 118 million. (Netflix forecasts its subscriber count will reach 135 million during the third quarter.)
Second, AT&T doesn’t seem to have much trouble getting people to buy their bonds, no matter how much debt they have. Last week, its sale of a $3.75 billion five-year floating-rate note, likely the largest in a decade, was met with strong demand, according to Bloomberg. Investment-grade bond managers may want to stay on AT&T’s good side. New bonds are usually issued at a discount to secondary-market prices, so buying into deals can provide a needed boost to returns as rising rates hurt the entire sector’s performance.
And there’s still the question of whether AT&T will actually follow through on its debt-reduction plans. Company treasurers have a patchy history of reducing leverage after deals, even when they say reducing debt burdens is a priority. That’s because shareholders prefer that the companies they own raise financing with debt, rather than diluting their stakes.
There are plenty of examples of companies that have not fulfilled promises to reduce leverage. Five years ago, when Verizon Communications (VZ) announced its megadeal to acquire Vodafone Group’s (VOD) minority stake in Verizon Wireless, the company said it expected to reduce debt and regain its single-A credit rating in “somewhere between four and five years.”
For that, Verizon would need to reduce its net debt to two times Ebitda. Today Verizon’s net debt is 2.4 times Ebitda, according to Bloomberg, essentially unchanged from 2014, the year the deal closed. AT&T’s net debt load is larger, at 3.6 times Ebitda.
The main risk this debt poses to company investors—shareholders and bondholders alike—is that the company’s credit rating gets downgraded below investment grade. Moody’s and S&P Global Ratings currently rate the debt two levels above junk.
For bond investors, a so-called fallen angel with more than $180 billion of debt outstanding would hurt the high-yield bond market as a whole. And shareholders are essentially the last line of defense against such a downgrade: The easiest source of cash in a pinch would be to cut its 50-cent dividend, which it has raised for 34 consecutive years.
Fritzsche and her colleagues do not think the dividend is at risk, however.
“We note no part of this call is our concern about dividend sustainability–we continue to view this as secure,” they wrote.
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>>> Lightwave Logic, Inc. (LWLG), a technology company, focuses on the development of photonic devices and non-linear optical polymer materials systems for the fiber-optic data communications and optical computing markets in the United States. It operates through two segments, Materials Development, and Prototype Device Design and Development. The Materials Development segment is involved in designing and synthesizing organic chromophores for use in its electro-optic polymer systems and photonic device designs. The Prototype Device Design and Development segment offers Electro-optic Modulators, which converts data from electric signals to optical signals that can then be transmitted over fiber-optic cables; and Polymer Photonic Integrated Circuits, a photonic device, which integrates various photonic functions on a single chip. The company is also developing the Ridge Waveguide modulator, a type of modulator that fabricates the waveguide within a layer of its electro-optic polymer systems. It intends to sells its products to electro-optic device manufacturers, such as telecommunications component and systems manufacturers, networking and switching suppliers, semiconductor and aerospace companies, and government agencies. The company was formerly known as Third-order Nanotechnologies, Inc. and changed its name to Lightwave Logic, Inc. in March 2008. Lightwave Logic, Inc. was founded in 1991 and is headquartered in Englewood, Colorado. <<<
>>> ATT showdown with DOJ over Time Warner finally gets a decision today
Washington Post
6-12-18
https://www.msn.com/en-us/money/companies/%E2%80%98everything%E2%80%99s-on-the-line%E2%80%99-atandt%E2%80%99s-showdown-with-doj-over-time-warner-finally-gets-a-decision-today/ar-AAyxvG1?OCID=ansmsnnews11
A federal judge is expected to rule Tuesday on whether to block AT&T's $85 billion Time Warner merger, in what has become America's most closely watched antitrust trial in decades.
The opinion by Judge Richard Leon could determine AT&T's future in digital entertainment as the company seeks to go toe-to-toe with tech titans such as Facebook, Google and Netflix. But the stakes are equally high for the Justice Department, which has not litigated a case of this kind since the Nixon administration. A court victory for the government, analysts say, could symbolize the beginning of a tough new era in antitrust enforcement. But an AT&T win could give pause to regulators — and perhaps deter them from blocking mergers in the future that might otherwise be deemed anticompetitive.
Though the Justice Department has sought to tamp down concerns about the AT&T case being a bellwether, analysts widely anticipate more deals to be announced in the event of an AT&T court victory, particularly mergers involving corporations that primarily operate in different industries. These types of so-called "vertical" deals are becoming more popular. In recent months, Verizon has purchased the digital media companies AOL and Yahoo. Amazon.com expanded its grocery business by buying Whole Foods. (Amazon chief executive Jeffrey P. Bezos also owns The Washington Post.) Comcast, meanwhile, is gearing up to fight Disney for control over 21st Century Fox.
"Everything's on the line now for the Department of Justice," said Gene Kimmelman, a former DOJ antitrust official who now leads the consumer advocacy group Public Knowledge. "They either come out as enormous victors … or they’ll face an avalanche of new transactions if they lose this case."
Analysts predict a wide range of possible outcomes in the trial. Leon could determine the merger poses a competitive threat and block the deal outright, siding with the Justice Department. He could rule for AT&T and approve the entire acquisition without conditions, making it possible for the deal to close by June 18. Or he could strike a middle ground, imposing his own changes to the deal or asking the two sides to help him tweak it.
No matter how he rules, the full implications will take time to digest — and will likely hold implications for a string of other mergers and acquisitions on the horizon. Leon has previously said to expect at least a 200-page written opinion.
The lengthy decision reflects the grueling six-week legal assault that government lawyers mounted against AT&T and Time Warner this spring in a dim, windowless Washington courtroom. Both AT&T and the Justice Department declined to comment for this story.
The merged firm, prosecutors argued, would anticompetitively unite AT&T's massive distribution infrastructure — its cellular and wired broadband networks — with Time Warner's premium content including HBO, Warner Bros. and Turner Broadcasting, whose assets include the cable channels CNN, TBS and TNT.
AT&T executives defended the merger in court as a major strategic shift for the telecom giant, one that could prove as significant as the company's decision more than a decade ago to enter the market for broadband and mobile data. In reinventing itself for an age of streaming media, AT&T aspires to deliver more television content over Internet connections to mobile and digital devices. With the viewing data it gathers from smart TVs, computers, tablets and smartphones, AT&T plans to build a targeted advertising empire resembling that of the Web's biggest ad giants.
That effort could be aided by another major milestone this week: The official repeal on Monday of the federal government's net neutrality rules. The rules, targeted for elimination by the Federal Communications Commission in a vote last year, had banned providers like AT&T or Verizon from prioritizing their own content over that of other websites. And they had laid the foundation for more stringent — though now also repealed — privacy regulations governing ISPs' handling of customer data.
Winning the antitrust case could allow AT&T to capitalize on that deregulation, analysts say.
"Consumer groups are worried that the court will give AT&T powerful new content, and that the FCC will let them monetize it in anticompetitive ways," said Paul Gallant, an industry analyst at Cowen & Co. "But investors are more sanguine. They like the hedge of AT&T owning content."
Antitrust attorneys litigating the Time Warner case relied on complex economic models and testimony from AT&T's competitors to outline a nightmare scenario in which AT&T could allegedly use its newfound control over Turner Broadcasting to unfairly benefit DirecTV, AT&T's own subscription television service.
Turner's control over live sports, news and other desirable programming would encourage AT&T to seek more money for that content when licensing it to competing TV services, the Justice Department argued. Those higher prices would allegedly be passed along to consumers to the tune of hundreds of millions of dollars per year. Meanwhile, the attorneys said, DirecTV would reap rewards by luring away any customers dissatisfied with the price hikes at other cable companies.
"AT&T would not want Time Warner content distributed in ways that increase competitive pressure on DirecTV," the government wrote in its closing brief to the court.
Attorneys for AT&T and Time Warner lashed out at the government's antitrust claims, calling them "preposterous." Thanks to new targeted advertising revenue, AT&T argued, the deal would lead to price decreases for TV viewers, not increases. And to highlight its good faith in content negotiations, AT&T pointed to 1,000 letters it sent to rival TV services last year committing to an arbitration process after the merger, in the event those competitors felt they were being overcharged for Time Warner content. Opponents of the deal said the arbitration offer was insufficient, though in his questioning in court, Leon expressed significant interest in it.
AT&T's legal team sought to dismantle the Justice Department's economic analysis of the deal, poking holes in research done by the agency's star witness, a University of California economist named Carl Shapiro. Shapiro's analysis failed to consider enough real-world examples of programming disputes, AT&T argued, instead drawing on surveys and long-term projections to arrive at the conclusion that consumers will be harmed by the merger.
Hanging over the trial was also the political shadow of President Trump, who has publicly and repeatedly criticized the merger as concentrating too much power "in the hands of too few." Arguing that it was being unfairly singled out for punishment, AT&T briefly demanded that the Justice Department hand over White House communications logs that could prove whether Trump inappropriately directed the agency to block AT&T's merger. But Leon denied that request, focusing narrowly instead on the core antitrust arguments in the case.
Wall Street will be looking for clues in the AT&T decision as to whether the government is likely to challenge those deals.
"At the simplest level, the market will draw a conclusion as to whether this administration is laissez faire or interventionist when it comes to big deals," he said.
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>>> American Tower Corporation (ATC) is a holding company. The Company operates as a real estate investment trust (REIT), which owns, operates and develops multitenant communications real estate. ATC's segments include U.S. property, Asia property, EMEA property, Latin America property, Services and Other. Its primary business is property operations, which include the leasing of space on communications sites to wireless service providers, radio and television broadcast companies, wireless data providers, government agencies and municipalities, and tenants in various other industries. Its U.S. property segment includes operations in the United States. Its Asia property segment includes operations in India. The EMEA property segment includes operations in Germany, Ghana, Nigeria, South Africa and Uganda. The Latin America property segment includes operations in Brazil, Chile, Colombia, Costa Rica, Mexico and Peru. Its services segment offers tower-related services in the United States. <<<
>>> American Tower Corp. operates as a developer of wireless and broadcast communications real estate, which engages in leasing antenna space on multi-tenant communications sites to different providers. It operates business through the following segments: U.S., Asia, EMEA, and Latin America. The U.S. segment handles operations in the United States. The Asia segment manages the properties in India. The EMEA segment offers services in Germany, Ghana, Nigeria, South Africa, and Uganda. The Latin America segment operates in Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Peru. The company was founded in 1995 and is headquartered in Boston, MA <<<
>>> AT&T Plans New Structure
WSJ
July 15 2017
By Drew FitzGerald
https://ih.advfn.com/p.php?pid=nmona&article=75243695
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 15, 2017).
AT&T Inc. plans to split the management of its telecom operations and its media assets after clinching a takeover of Time Warner Inc., putting veteran AT&T executive John Stankey in charge of the Time Warner business, according to people familiar with the matter.
The reorganization would create two divisions. One would contain AT&T's wireless business and its DirecTV satellite television business, the other would comprise the Time Warner assets it plans to acquire, including HBO, Warner Bros. and the Turner cable unit that houses CNN, the people said. AT&T last year said it would take control of the entertainment company in a cash-and-stock deal worth about $85 billion.
The new structure would keep AT&T Chairman and Chief Executive Randall Stephenson atop the company with two top lieutenants, in an organization that would resemble Comcast Corp. Brian Roberts, Comcast's chairman and chief executive, has two segment chiefs: one in charge of the cable business and the other heading NBCUniversal.
The Justice Department is conducting an antitrust review of the transaction, although President Donald Trump's pick for antitrust chief, White House deputy counsel Makan Delrahim, is awaiting Senate confirmation. The Senate is locked in a broader political showdown over nominations, and it isn't clear when Mr. Delrahim might be confirmed.
Justice Department staffers have interviewed executives and collected information from the companies and rivals in the industry, but the process is in something of a holding pattern until Mr. Delrahim is in place, according to a person familiar with the matter.
Mr. Trump vowed to block the deal when he was still a candidate but hasn't commented on it since taking office. The combination of two distinct businesses -- video and the networks that distribute it -- is considered unlikely to face an outright government challenge. But authorities have imposed merger conditions on similar tie-ups, including Comcast's takeover of NBCUniversal.
The administration's ongoing feud with Time Warner subsidiary CNN adds another wrinkle to the process. White House officials have tangled with several national media outlets, but Mr. Trump has saved extra ire for the cable news network.
AT&T has said it would maintain CNN's independence post-merger and has no plans to spin off the network. The company still expects to complete the transaction later this year.
AT&T spokesman Larry Solomon said the company is still developing its integration plans and hasn't completed the new organizational chart.
Mr. Stankey, a 30-year AT&T veteran, is currently head of AT&T's entertainment business, which includes DirecTV and has offices near Los Angeles. He has previously served as the company's strategy chief and held various executive roles in its traditional telecom business.
He would sit atop the existing Time Warner business, but AT&T has indicated it would like to retain some top executives at Time Warner to take advantage of their expertise, according to a person familiar with the matter. Time Warner CEO Jeffrey Bewkes has said he will stay on for an interim period to help with the transition.
Under the new structure, DirecTV would be combined with the company's telecom operations, which are run out of AT&T's Dallas headquarters and include both the wireless and landline business, the people familiar with the matter said. That segment would be run by John Donovan, another AT&T veteran who is currently chief strategy officer, one of the people said.
News of planned executive changes were earlier reported by Bloomberg News.
AT&T has hinted it will be more than just a passive owner of Time Warner's news and entertainment assets. Mr. Stephenson in May floated some ideas for the combination that included shorter, smartphone-friendly HBO videos and specially targeted advertising.
How Time Warner, as part of AT&T, might negotiate with the carrier's competitors is another potential concern. Mr. Stephenson addressed some of those fears in May by repeating his pledge to keep its most popular content available to all distributors.
"You can't think about taking 'Game of Thrones' and you're only going to make it available to AT&T customers," he said at the time. "That's crazy."
AT&T has started toying with special entertainment offers ahead of the deal's close. In April, it offered subscribers of its premium unlimited data plans free access to HBO, which normally costs $15 a month.
Aside from the Justice Department, several state attorneys general are taking the routine step of reviewing the deal's antitrust implications. The states' probe deals with how AT&T's nearly 147 million wireless customers affect its bargaining position with other media companies, among other questions, according to a person familiar with the joint effort.
Government enforcers sometimes monitor a merged company to make sure two newly combined businesses don't gain an unfair edge over rivals.
"They could be anticipating that they're going to have to face some stiff enforcement proposals and they're preparing themselves," said Gene Kimmelman, chief executive of Public Knowledge, an interest group that opposes the deal.
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American Tower - >>> The global connector
http://www.fool.com/investing/2016/12/27/3-stocks-to-help-you-build-retirement-wealth.aspx?source=yahoo-2&utm_campaign=article&utm_medium=feed&utm_source=yahoo-2
American Tower (NYSE:AMT) also generates very stable revenue by leasing space on its communications towers to customers. These clients typically sign long-term contracts and often pay many of the associated expenses. That leads to relatively predictable revenue for American Tower, enabling it to pay a sustainable dividend that currently yields more than 2%.
American Tower expects to grow its revenue streams by adding more tenants to its towers as well as building or buying additional towers. Driving the need for more tower space is rising data demand by smartphone and tablet users as well as the rapid increase in machine-to-machine data transfers (i.e., Internet of Things). Data usage from those machines in the U.S. alone is expected to grow from just 34 million lines in 2012 up to 639 million lines by 2019. Meanwhile, total U.S. mobile traffic data is projected to increase sixfold through 2020. These trends should enable American Tower to continue growing its tower rental streams at a robust rate, with the company positioned to continue expanding revenue and cash flow by the same mid-teens compound annual growth rate it has captured since 2007.
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>>> Verizon (VZ)
https://www.thestreet.com/story/13646215/2/10-best-dividend-stocks-to-own-now-for-a-safe-retirement.html
Verizon is a holding in our Top 20 Dividend Stocks portfolio. When it comes to wireless commutations, Verizon is at the top. Since the 1980's when it was spun off in the breakup of the original AT&T, Verizon has pursued wireless to perfection. These days it represents 93% of operating income on 70% of revenues.
The remaining business comes from the wireline telephone activity that was once the core of AT&T. Within these two broad confines reside a variety of products and services like voice and data, corporate networking, broadband and security solutions. Hundreds of millions of people in the U.S. and around the world are touched everyday by Verizon's highly diversified business.
The wireless business requires considerable capital to establish and to maintain the latest in technology. However, once in place, a digital network generates enormous cash flow. Since there is a limited amount of radio spectrum allocated to mobile wireless, meaningful new entrants for all practical purposes are non-existent.
Verizon has been paying quarterly dividends continuously since the 1984 breakup of AT&T. Increases have been made each year since 2006, qualifying the company as a Dividend Achiever.
Over the past ten years, dividend growth has averaged 3.8% with a 2.6% rate in the past five. The latest quarterly dividend of $0.565 per share was declared on July 6. An increase to $0.575 in the third quarter would be consistent with patterns of previous increases.
Verizon pays out a conservative 50% of earnings while retaining ample reserves for capital expenditures and acquisitions. In the last 12 months, Verizon's operating cash flow amounted to a solid $36 billion thus insuring both the safety of the current dividend and the ability to increase future payouts.
Shares of Verizon currently offer investors a high yield of 4.1%.
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American Tower -- >>> This Cell Phone Tower REIT Is a Strong Buy Now
http://www.thestreet.com/story/13413037/1/this-cell-phone-tower-reit-is-a-strong-buy-now.html?puc=yahoo&cm_ven=YAHOO
By Devesh Kumar Follow
01/05/16
American Tower Corp. (AMT - Get Report) is among certain dividend-paying stocks that should offer a great combination of growth and income in the new year.
Based in Boston, AMT is a real estate investment trust (REIT) that essentially serves as a landlord for wireless companies, by leasing space on its towers for their communications equipment.
Most service operators prefer this model, because they don't need to exhaust cash resources or wait to utilize the towers. American Tower on the other hand strives to put the most number of tenants in each tower.
It's a smart business blueprint that offers a strong play on scale and profitability (12.3% net margin for trailing twelve months). Trading at 33.6 times forward earnings, American Tower is actually available at a steep discount to peers like Crown Castle International Corp. (nearly 45 times) and SBA Communications Corp. (123.7 times).
While Crown Castle and SBA Communications have faster growth metrics, we believe American Tower is a more firmly shaped and reinforced entity with its diversified structure (domestic and global) and large exposure to the industry.
The company is one of the largest global REITs by virtue of being owner, operator and developer of multi-tenant communications properties with a portfolio of over 99,000 communications sites. With the recently announced Viom transaction, its global tower count would be nearly 140,000 towers with almost two tenants per tower.
The company has clearly outperformed the industry by a wide margin, with three-year average revenue growth at 18.8%, trumping the snail-like 1.7% by the industry. On its topline, the company has logged a 27.7%, three-year average upswing vs. the 3.8% managed by its core sector.
Analysts expect the company to maintain the growth momentum. American Tower finished the December-15 fiscal year with an earnings-per-share (EPS) growth of 11.20% backed by a 15.6% revenue upswing. Next year, EPS growth should stay at similar levels (10.10%) and topline rise is expected to clock in 12%.
Over the next five years, American Tower is slated to post an EPS growth of 12.53% every year (which is slightly higher than the sector).
Investment experts offering 12-month price targets for AMT have a median target of $115 -- implying a 19% increase from its last price. Most have a "buy or out-perform" ratings on the stock.
Must Read: PHI, SKM And VIV, 3 Telecommunications Stocks Pushing The Industry Lower
Another metric to help appreciate the impact of American Tower's financial landscape is Adjusted Funds From Operations, or AFFO. This in the third quarter increased by 21.4% to $558 million. American Tower expects its full year 2015 AFFO to come in between $2.115 billion-$2.135 billion, signifying a 17.1% mid-point growth year on year.
With mobile data growth finding its feet, American Tower offers an inside opportunity to be a part of the widespread proliferation that's right around the corner.
And finally, American Tower is also an active M&A player, which allows it to locate and grab fresh, new assets and strengthen its portfolio.
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>>> Crown Castle International Corp. CCI
http://finance.yahoo.com/news/5-great-dividend-stocks-momentum-174705619.html
Zacks
Crown Castle International Corp. operates as a real estate investment trust. It owns, operates, and leases shared wireless infrastructure primarily in the U.S. and Australia. The company provides towers and other structures, such as rooftops and distributed antenna systems and small cells. It provides access, including space or capacity to its towers, small cells, and third-party land interests via long-term contracts in various forms, including license, sublease, and lease agreements. It also offers network services.
The company has witnessed a rise of 1.4% in its current year estimates over the past one month. Alongside, upward price movements of 10.64% and 4.61% over the past four and twelve weeks, respectively, have helped the stock gain a Momentum Score of ‘A.’
Also, this Zacks Rank #2 company offers a promising dividend yield of 3.83%. <<<
>>> InterDigital, Inc. designs and develops technologies that enable and enhance wireless communications in the United States and internationally. It offers technology solutions for use in digital cellular and wireless products and networks, such as 2G, 3G, 4G, and IEEE 802-related products and networks. The company develops cellular technologies comprising technologies related to CDMA, TDMA, OFDM/OFDMA, and MIMO for use in 2G, 2.5G, and 3G wireless networks and mobile terminal devices; and other wireless technologies related to Wi-Fi, WLAN, WMAN, WRAN, and the digital cellular area. Its patented technologies are used in various products, including mobile devices, such as cellular phones, tablets, notebook computers, and wireless personal digital assistants; wireless infrastructure equipment comprising base stations; and components, dongles, and modules for wireless devices. As of December 31, 2014, the company held a portfolio of approximately 20,500 patents and patent applications related to the fundamental technologies that enable wireless communications. InterDigital, Inc. was founded in 1972 and is headquartered in Wilmington, Delaware. <<<
American Tower, Verizon -- >>> Verizon’s Transaction with American Tower: What You Need to Know
Market Realist
By Ray Sheffer
April 2, 2015
http://finance.yahoo.com/news/verizon-transaction-american-tower-know-200553576.html
Verizon Reports Growing Wireless Segment Revenues in 2014
Verizon’s tower transaction
Verizon (VZ) signed an agreement with American Tower (AMT) for a wireless tower portfolio transaction on February 5, 2015. According to the agreement, American Tower will have sole rights to lease and operate ~11,324 wireless towers—owned by Verizon—for an initial payment of ~$5 billion. American Tower will also buy 165 Verizon towers for $0.1 billion. Verizon’s tower transaction is expected complete by the end of 1H15. American Tower will make an initial payment of ~$5.1 billion for this transaction.
Verizon has been interested in rationalizing its asset base and tower sales for some time now. The company was looking for favorable terms and pricing to monetize its tower base. AT&T (T) had beaten Verizon in tower monetization in 2013. AT&T entered into a similar tower transaction agreement with Crown Castle (CCI) for ~9,700 wireless towers in October 2013.
American Tower takes over the majority of Verizon’s towers
This tower transaction covers the majority of Verizon’s towers in the 50 united states. According to American Tower’s press release, it can lease and operate these towers for an average tenure of ~28 years. At the end of the tenure, it can also buy these towers from Verizon for ~$5 billion. The company will have to make payments during the 2034–47 period.
According to American Tower, Verizon will sublease capacity on these towers from American Tower for a monthly cost of $1,900 per tower for at least ten years. However, the tenure can be extended. Nonetheless, there is a 2% per annum escalator clause on the monthly rent.
If you want to take on diversified exposure to Verizon, you can invest in the Technology Select Sector SPDR Fund (XLK). The ETF held ~5% in the company on March 19, 2015.
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>>> Could AT&T, Verizon Pull Off Radio Spectrum REIT?
By REINHARDT KRAUSE, INVESTOR'S BUSINESS DAILY
12/16/2014
http://news.investors.com/121614-730832-telecom-reit-conversion-taxes-radio-spectrum-impact.htm?ven=yahoocp,yahoo&src=aurlled&p=full
Will 2015 be the year of the REIT for phone companies, including perhaps Verizon and AT&T?
Converting to a real estate investment trust provides tax benefits on earnings. Most REITs own office buildings and shopping centers, but companies in other industries have sought REIT status to lower tax bills. Conversion to a REIT requires IRS approval.
Within the telecom industry, cellphone tower operators American Tower (NYSE:AMT) and Crown Castle International (NYSE:CCI) are REITs.
Telecom firms have assets they could conceivably spin off into REITs. Above is an AT&T mobile phone switching office in Charlotte, N.C.
Telecom firms have assets they could conceivably spin off into REITs. Above is an AT&T mobile phone switching office in Charlotte, N.C. View Enlarged Image
Windstream Holdings (NASDAQ:WIN), a rural-focused wireline phone company, announced plans in late July to spin off network assets into an independent, publicly traded REIT. The spinoff is expected to be completed next quarter.
Analysts have mulled whether two other rural local phone companies, CenturyLink (NYSE:CTL) and Frontier Communications (NASDAQ:FTR), could also seek REIT status.
But the biggest question is whether the nation's two phone giants, AT&T (NYSE:T) and Verizon Communications (NYSE:VZ), will spin their wireline networks or other assets into REIT holdings. Oppenheimer analyst Tim Horan, in a report, speculates that AT&T or Verizon could spin off their wireless radio spectrum assets into REIT holding companies.
Whether more phone companies take the REIT plunge could depend on "how Windstream goes in Q1," says Bernstein Research analyst Paul de Sa, referring to stock market reaction.
In a surprise, Windstream CEO Jeff Gardner stepped down on Dec. 11. Chief Financial Officer Tony Thomas, who served most recently as president of REIT operations, replaced him. Windstream says it's still committed to executing the REIT spinoff and will select a new head of REIT operations.
De Sa says that another factor in whether firms chase REIT options is "bonus depreciation" tax benefits for telecom companies. Phone companies will pay higher taxes unless Congress renews the bonus depreciation allowance, offered in 2008 to spur capital investment.
The tax break lets companies deduct half the cost of some capital equipment purchases immediately instead of over many years. The rules expired in 2013, but Congress could extend them retroactively.
Many stocks run up in anticipation of REIT announcements or after companies disclose conversion plans. Examples include lumber firm Weyerhaeuser (NYSE:WY), American Tower and Equinix (NASDAQ:EQIX), a data center operator.
Windstream stock jumped 12% when the company announced REIT plans on July 29. Phone company stocks rallied on the news. Shares of Windstream, which reported Q3 earnings that missed estimates, have since pulled back to pre-REIT-announcement levels.
Windstream plans to spin off real estate and fiber and copper network assets into a REIT, while retaining operational control through a long-term leasing arrangement that will include annual $650 million payments.
The catch for shareholders: a lower overall dividend. Windstream now pays a $1 per share annual dividend. The new Windstream would pay a 10-cent dividend, while the newly created REIT pays a 60-cent dividend.
"The deal's artful dividend cut will allow Windstream to invest more capital with the goal of returning to revenue and EBITDA growth, a key constraint of its current capital allocation practice," said bond rater Moody's in a report on potential REIT conversions among certain utilities.
Data storage firms, oil and gas companies and billboard owner CBS (NYSE:CBS) are among REIT converts.
REIT-focused exchange traded funds such as Schwab US REIT (ARCA:SCHH) and SPDR Dow Jones REIT (ARCA:RWR) have been solid in 2014.
But the specter of rising interest rate looms as the economy picks up steam. "Generalists view REITs as anathema in a rising rate environment," said a Morgan Stanley research report. Regarding a possible REIT strategy, Verizon CFO Fran Shammo said in September, "Everything is on the table."
Oppenheimer's Horan says that one REIT option might be viable as the value of radio spectrum owned by wireless phone companies swells. He speculates that AT&T or Verizon could spin off their spectrum assets into a holding company that would lease the assets back to an operating company.
"AT&T and Verizon could then shift their dividend payments into the holding company to take advantage of the REIT taxation structure," Horan said in his report.
Read More At Investor's Business Daily: http://news.investors.com/technology/121614-730832-telecom-reit-conversion-taxes-radio-spectrum-impact.htm#ixzz3No6yB1NV
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>>> Verizon Communications Inc. provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. Its Wireless segment offers access to various wireless voice and data services comprising Internet access through smart and basic phones, and notebook computers and tablets; messaging services; and consumer and business focused multimedia applications under Verizon Wireless brand. This segment also provides location-based services; global data services; HomeFusion Broadband, a high-speed Internet service for homes; other connection-related services, such as network access and value added services to support telemetry-type applications; and machine-to-machine services that support devices used in healthcare, manufacturing, utilities, distribution, and consumer products markets, as well as sells smart phones and basic phones, tablets, and other Internet access devices. As of May 15, 2014, it served 103.3 million retail customers. The company?s Wireline segment offers video services over its fiber-optic network; data services comprising high-speed Internet and FiOS broadband data products, as well as local exchange capacity, managed, mobility, and security services; voice services, such as local exchange, regional, long distance, wire maintenance, and voice messaging services, as well as VoIP, and landline and wireless services; and local dial tone and broadband services to local, long distance, and other carriers. This segment also provides networking products and solutions, such as private Internet protocol services, and Ethernet access and ring services; and infrastructure and cloud services. In addition, it offers FiOS Quantum TV service in New York and New Jersey. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was founded in 1983 and is headquartered in New York, New York. <<<
>>> American Tower: Great Long-Term Story
http://seekingalpha.com/article/2153463-american-tower-great-long-term-story
Apr. 22, 2014
Summary
•Global demand for personal mobile devices will continue to grow significantly.
•No new technology in sight to replace towers as means of relaying cell phone and other personal device signals.
•Virtual local monopoly status once a tower is owned. Only a few major global players in this market. High barriers to entry, excellent cash flow.
American Tower (AMT) is a leading player in the global cell tower market. Given that global demand for personal mobile devices continues to grow, the need for and use of towers to relay their signals will also continue to grow and probably for many years to come. So, the demand side of the equation appears to be very robust. Additionally, given the high capital investment required and commonplace local community resistance to additional towers, the barriers to entry are high.
There does not appear to be any near-term technology replacement for the tower solution. As such, the future revenue streams and pricing power appear to be safe.
American Tower is one of only a few major global players in this market and there is still tremendous growth opportunities internationally where tower deployment has been slower to evolve. Further, AMT recently converted to a REIT structure making the future distributions more tax advantaged. Over time, one would expect the payout to increase as the business has a very strong cash flow and eventually acquisitions will slow and then payouts can increase substantially. So, this story has both growth and high dividend yield potential.
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>>> How SBA Communications Corp. (SBA) Stock Stands Out in a Strong Industry
By Zacks Equity Research
December 30,2014
http://finance.yahoo.com/news/sba-communications-corp-sba-stock-113434767.html
One stock that might be an intriguing choice for investors right now is SBA Communications Corp. (SBAC). This is because this security in the Rental & Leasing Services space is seeing solid earnings estimate revision activity, and is in great company from a Zacks Industry Rank perspective.
This is important because, often times, a rising tide will lift all boats in an industry, as there can be broad trends taking place in a segment that are boosting securities across the board. This is arguably taking place in the Rental & Leasing Services space as it currently has a Zacks Industry Rank of 24 out of more than 250 industries, suggesting it is well-positioned from this perspective, especially when compared to other segments out there.
Meanwhile, SBA Communications Corp. is actually looking pretty good on its own too. The firm has seen solid earnings estimate revision activity over the past month, suggesting analysts are becoming a bit more bullish on the firm’s prospects in both the short and long term.
In fact, over the past month, current quarter estimates have narrowed from a loss of 14 cents to a loss of 10 cents per share, while current year estimates have narrowed from 56 cents per share to loss of 43 cents per share. This has helped (SBAC) to earn a Zacks Rank # 2 (Buy), further underscoring the company’s solid position.
So, if you are looking for a decent pick in a strong industry, consider SBA Communications Corp. Not only is its industry currently in the top third, but it is seeing solid estimate revisions as of late, suggesting it could be a very interesting choice for investors seeking a name in this great industry segment.
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>>> Cell Tower Companies: The Best Way To Invest In The Mobile Data Boom
Nov 4 2013
includes: AMT, CCI, SBAC
http://seekingalpha.com/article/1801822-cell-tower-companies-the-best-way-to-invest-in-the-mobile-data-boom?source=yahoo
Wireless Tower Infrastructure
Wireless communication towers and the ubiquitous fiber optic cable wires circling the globe via data centers are the most critical pieces of the internet infrastructure that connect people, devices, and networks. In this outlook, we will focus on the tower companies, specifically American Tower (NYSE: AMT), the second largest REIT, and Crown Castle International (NYSE: CCI), which recently announced that it will be converting to REIT status in 2014. It will be the fourth largest REIT by market capitalization upon conversion.
We are overweight the data center/tech sector due to the explosive growth of data usage particularly by the penetration of smart phones. The growth profiles of the tower companies lead all equity REITs due to strong demand fundamentals in both the US and international markets, though international mobile network deployment is still in an early stage compared to the US. In particular, tower companies are an attractive way to play the growth in demand for data due to their investment-grade tenants, stable cash flows, access to capital, and high barriers to entry.
Towering Demand
Towers are principally vertical structures made of galvanized steel upon which the wireless carriers, governmental agencies, broadband data providers, and other mobile technology companies lease space to install the antennas that form the critical backbone for cellular, wireless, radio, television, microwave, and other radio networks. The rapid growth of smart phones and tablets has generated an enormous increase in wireless data consumption placing increasing demands on the carriers to enhance network capacity, quality, and coverage.
The number of wireless subscriber connections in the US now exceeds the total US population. Though the market for connections may seem saturated domestically, a research report by Information Age Economic estimates that investment in mobile broadband will contribute between $260 billion and $355 billion to US GDP in 2017, enough for a 1.6-2.2% increase, while generating 1.2 million net new jobs. Facebook (NASDAQ: FB) is often viewed as a proxy for today's world of internet usage inasmuch as the company processes 350 million photographs, 4.5 billion 'likes', and 10 billion messages per day!
One apparent contradiction that applies in the world of data usage is that 'supply creates demand'. We have heard this term used in other aspects of commercial real estate, and given it little credence. However, faster speeds of data delivery encourage users to download or upload a song, movie, or picture from their mobile device instead of a computer. 4G technology is 20-50 times faster and more efficient than the outgoing 3G networks, and 5G promises to be a multiple of 4G when the next refresh of phones and cellular antennas are ready to be deployed. The ability to have social media applications open and actively engaged while being away from a wired internet connection creates demand that was not previously there, so we actually do believe the somewhat dubious claim. As such, Cisco projects data usage on wireless networks to grow by more than 66% annually from 2012 to 2017, as shown in Figure 1.
(click to enlarge)
The Tenants
The continuous push of technology to meet demand, and the resulting portfolio upgrades by the telecom companies are a large driver of revenues for the tower companies. Similar to other industries with upgrade cycles, the periodic upgrade in technology provides for new demand in the most critical areas as the less critical are receiving the predecessor technology. AT&T (NYSE: T) and Verizon (NYSE: VZ) are the leaders in technology, and the densely populated areas are deemed most critical. Sprint (NYSE: S) and T-Mobile (NYSE: TMUS) complete the 'big 4' of US telecom.
AT&T and VZ are nearly done with their deployment of 4G-LTE, the latest technology, and Sprint and TMUS will be done soon after. However, each of the big four has announced plans to upgrade to LTE-Advanced after completing their LTE networks, which will require another round of capital expenditures.
Currently, AT&T and VZ are in the 'densification' , or 'cell-splitting', portion of their upgrade cycle. The densification of 4G LTE (Long Term Evolution) requires carriers to place sites on new towers to 'infill' weak areas of the network. New leases result in higher revenue for the tower owners when compared to 'amendments', which occur on towers that already support a carrier's equipment. Such amendments can create varying amounts of revenue based on the lease contract, but they are, in general, beneficial to tower owners as the carriers must leave on the previous technology equipment until all devices using that technology are out of circulation. In all, the carriers have guided to $25 billion in capital expenditures for 2013, and we feel confident that the towers will continue to benefit from the carriers' the technology-fueled upgrade cycle.
Tower Alternatives
Areas that restrict building of new towers or have an especially dense population can prove difficult to serve with traditional towers alone. Perfecting connections and network quality in such places requires incremental capacity via rooftop antennas, DAS (both indoor and outdoor), Wi-Fi (facilitates wireless service in retail stores, offices and other venues), and other types of Small Cell networks (enhances speed in urban environments). DAS, or Distributed Antenna Systems, are networks of low range antenna sites that can be deployed in a wide variety of properties such as airports, shopping malls, and sporting arenas. As an example, 300 DAS installations were used at the London 2012 Olympics to support 359,000 mobile users at one time in a part of London that previously had little coverage. We view these solutions as positive for AMT and CCI as they help to fill capacity gaps and promote more mobile usage. Though it comprises a small portion of their portfolios, AMT and CCI are significant players in each of the above-mentioned markets.
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>>> The Brics announces the creation of a new world internet system INDEPENDENT from US and Britain
September 20, 2013 in Technology
by rosso
http://planet.infowars.com/technology/the-brics-announces-the-creation-of-a-new-world-internet-system-independent-from-us-and-britain
The BRICS “Independent Internet” Cable. In Defiance of the “US-Centric Internet”
The President of Brazil, Dilma Rousseff announces publicly the creation of a world internet system INDEPENDENT from US and Britain ( the “US-centric internet”).
Not many understand that, while the immediate trigger for the decision (coupled with the cancellation of a summit with the US president) was the revelations on NSA spying, the reason why Rousseff can take such a historic step is that the alternative infrastructure: The BRICS cable from Vladivostock, Russia to Shantou, China to Chennai, India to Cape Town, South Africa to Fortaleza, Brazil, is being built and it’s, actually, in its final phase of implementation.
No amount of provocation and attempted “Springs” destabilizations and Color Revolution in the Middle East, Russia or Brazil can stop this process. The huge submerged part of the BRICS plan is not yet known by the broader public.
Nonetheless it is very real and extremely effective. So real that international investors are now jumping with both feet on this unprecedented real economy opportunity. The change… has already happened.
Brazil plans to divorce itself from the U.S.-centric Internet over Washington’s widespread online spying, a move that many experts fear will be a potentially dangerous first step toward politically fracturing a global network built with minimal interference by governments.
President Dilma Rousseff has ordered a series of measures aimed at greater Brazilian online independence and security following revelations that the U.S. National Security Agency intercepted her communications, hacked into the state-owned Petrobras oil company’s network and spied on Brazilians who entrusted their personal data to U.S. tech companies such as Facebook and Google.
..
BRICS Cable!
http://www.bricscable.com/(see video)
BRICS Cable… a 34 000 km, 2 fibre pair, 12.8 Tbit/s capacity, fibre optic cable system
¦For any global investor, there is no crisis – there is plenty of growth. It’s just not in the old world
¦BRICS is ~45% of the world’s population and ~25% of the world’s GDP
¦BRICS together create an economy the size of Italy every year… that’s the 8th largest economy in the world
¦The BRICS presents profound opportunities in global geopolitics and commerce
¦Links Russia, China, India, South Africa, Brazil – the BRICS economies – and the United States.
¦Interconnect with regional and other continental cable systems in Asia, Africa and South America for improved global coverage
¦Immediate access to 21 African countries and give those African countries access to the BRICS economies.
¦Projected ready for service date is mid to second half of 2015.
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Tower Sector -- >>> Cell Phone Tower Companies Become Vertical REITs: Is it Time to Snatch Them Up?
Wall Street Transcript
Sep 12, 2013
http://finance.yahoo.com/news/cell-phone-tower-companies-become-172600790.html
67 WALL STREET, New York - September 12, 2013 - The Wall Street Transcript has recently published its Wireless Communications & Telecom Report offering a timely review of the sector to serious investors and industry executives. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Tower Cell Splitting - Global Wireless Spectrum Allocation - 4G LTE and 3G Infrastructure Upgrades
Companies include: American Tower Corp. (AMT), Crown Castle International Cor (CCI), SBA Communications Corp. (SBAC), AT&T, Inc. (T), Verizon Communications Inc. (VZ), Sprint Nextel Corp. (S), Dish Network Corp. (DISH) and many others.
In the following excerpt from the Wireless Communications & Telecom Report, an expert analyst discusses the outlook for the sector for investors:
TWST: I saw that American Tower is now a REIT. In many ways these companies are real estate companies, but why specifically did American Tower make that change?
Mr. Lowe: I agree, these companies are fundamentally real estate businesses, so location matters. It is vertical real estate. If I were to build a tower in the middle of a cornfield where there are no subscribers within a 10-mile radius, none of the carriers are going to have any desire to be located on that tower. So location is going to matter, and the physical location of the tower is going to drive a lot of the decision-making.
I think the primary reason for AMT's conversion, and why Crown Castle will look to convert when their NOL position is exhausted in the 2015-2016 time frame, is because it is the most tax-efficient structure. As a REIT you avoid paying federal income tax in the U.S. The offset is you are required to pay out at least 90% of your taxable income and return that to shareholders, but that trade-off is a positive one in terms of being able to avoid a lot of the tax liability associated with being a C-Corp in a tax-paying position.
Said in another way, AMT looked to convert when they were getting close to a point where their net operating losses were exhausted...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts.
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Name | Symbol | % Assets |
---|---|---|
Facebook Inc A | FB | 15.25% |
Alphabet Inc Class C | GOOG | 11.97% |
Alphabet Inc A | GOOGL | 11.33% |
The Walt Disney Co | DIS | 6.90% |
AT&T Inc | T | 4.84% |
Verizon Communications Inc | VZ | 4.64% |
Comcast Corp Class A | CMCSA | 4.57% |
Netflix Inc | NFLX | 4.20% |
Charter Communications Inc A | CHTR | 2.97% |
Activision Blizzard Inc | ATVI | 1.82% |
Name | Symbol | % Assets |
---|---|---|
Facebook Inc A | FB | 15.00% |
Alphabet Inc Class C | GOOG | 11.83% |
Alphabet Inc A | GOOGL | 11.23% |
AT&T Inc | T | 7.95% |
Verizon Communications Inc | VZ | 4.59% |
Comcast Corp Class A | CMCSA | 4.53% |
The Walt Disney Co | DIS | 4.17% |
Netflix Inc | NFLX | 4.16% |
Charter Communications Inc A | CHTR | 2.98% |
Activision Blizzard Inc | ATVI | 1.74% |
Name | Symbol | % Assets |
---|---|---|
NXP Semiconductors NV | NXPI | 5.13% |
Qualcomm Inc | QCOM | 5.04% |
Analog Devices Inc | ADI | 4.94% |
Nokia Oyj ADR | NOK | 4.94% |
Telefonaktiebolaget L M Ericsson ADR Class B | ERIC | 4.53% |
Xilinx Inc | XLNX | 4.12% |
American Tower Corp | AMT | 3.05% |
Akamai Technologies Inc | AKAM | 2.90% |
AT&T Inc | T | 2.90% |
Skyworks Solutions Inc | SWKS | 2.90% |
Name | Symbol | % Assets |
---|---|---|
Broadcom Inc | AVGO | 1.45% |
Intel Corp | INTC | 1.42% |
Marvell Technology Inc | MRVL | 1.40% |
Micron Technology Inc | MU | 1.39% |
Advanced Micro Devices Inc | AMD | 1.38% |
Lenovo Group Ltd | 0992.HK | 1.37% |
Telefonaktiebolaget L M Ericsson Class B | ERIC-B.ST | 1.35% |
Qorvo Inc | QRVO | 1.35% |
MediaTek Inc | 2454.TW | 1.35% |
Prysmian SpA | PRY.MI | 1.34% |
Name | Symbol | % Assets |
---|---|---|
Facebook Inc A | FB | 20.36% |
Alphabet Inc A | GOOGL | 11.76% |
Alphabet Inc Class C | GOOG | 11.75% |
T-Mobile US Inc | TMUS | 4.95% |
Electronic Arts Inc | EA | 4.54% |
Netflix Inc | NFLX | 4.46% |
Charter Communications Inc A | CHTR | 4.27% |
The Walt Disney Co | DIS | 4.25% |
Activision Blizzard Inc | ATVI | 4.24% |
Verizon Communications Inc | VZ | 4.13% |
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